10. NOTES PAYABLE

CONVERTIBLE NOTES

In August 2013, the Company and the holder of the $150,000 of past due convertible notes and approximately $15,000 of accrued interest, agreed to convert the notes and accrued interest thereon at a conversion price of $0.50 per share thereby issuing 330,000 shares of the Company’s common stock and an additional warrant for 330,000 shares of common stock exercisable at $2.25 per share which vests immediately and expires on August 11, 2016. This agreement represents an inducement to convert the notes. The fair value of the common stock and warrant issued exceeded the fair value of the original conversion terms of the notes and the related accrued interest resulting in a debt conversion expense of $687,286 which is recorded in Other income/(expense) on the Statement of Operations. The fair value of the warrant on the date of the grant was estimated at $360,428 using a Black-Scholes option pricing model with the following assumptions: (1) expected volatility of 137% based on historical volatility, (2) an interest rate of 0.61%, (3) expected life of 3 years and (4) zero dividend yield. The fair value of the common stock based on the date of grant was $492,063.

On November 14, 2014, the Company issued a two-month convertible note in the principal amount of $200,000 to an investor which is convertible into the Company’s common stock at $1.05 per share of common stock, bears interest at 12% per annum and is secured by substantially all the assets of the Company. In connection with the convertible note issuance, the Company issued the investor an immediately vested five-year warrant to purchase 400,000 shares of the Company’s common stock at an exercise price of $1.05 per share. The relative fair value of the warrant on the date of the grant was estimated at $79,983 using the Black-Scholes valuation model under the following assumptions: (1) expected volatility of 127.5%, (2) risk-free interest rate of 1.65%, (3) expected term of five years and (4) 0% dividend yield. The relative fair value of the warrant was recorded as a debt discount with a corresponding credit to additional paid in capital and will be amortized over the term of the note. See Note 17 - Subsequent Events for additional details.

Amortization of debt discount for the years ended December 31, 2014 and 2013 was $61,626 and $173,484, respectively, related to convertible notes payable.

NON-CONVERTIBLE NOTES

In February 2013, the Company borrowed $2,000 from a shareholder on an unsecured basis with interest of 12% per annum payable on demand. The loan was paid in full during the year ended December 31, 2013 with accrued interest thereon of $5.

In conjunction with the acquisition of EV Pass in April 2013, the Company issued a non-interest bearing note in the principal amount of $75,000, to be repaid in three equal installments of $25,000 on each subsequent three-month anniversary date of the note such that the note was scheduled to be repaid in full by November 3, 2013. During the years ended December 31, 2014 and 2013, the Company made aggregate repayments of $0 and $25,000, respectively, such that the remaining principal balance was $50,000 as of December 31, 2014. Subsequent to December 31, 2014, the Company repaid the remaining principal balance such that the note was no longer outstanding as of December 7, 2015.

In conjunction with the acquisition of 350 Green in in April 2013, the Company issued a non-interest bearing note to the former members of 350 Green, secured by certain assets of the Company, in the amount of $500,000, which requires a $10,000 payment at closing, a subsequent monthly payment of $10,000 and monthly payments of $20,000 thereafter until such time as the note is paid in full, circa May 2015. The Company imputed an interest rate of 12% per annum and recorded the debt at its present value of $444,768 on the date of issuance. During the years ended December 31, 2014 and 2013, the Company has made aggregate repayments, inclusive of accrued interest, of $0 and $140,000, respectively, such that, as of December 31, 2014, the outstanding balance of principal and accrued interest was $327,967 and $29,103, respectively. As the Company has not made any payments since November 2013, the note is currently in default. See Note 16 - Commitments and Contingencies - Litigation for details of litigation associated with the default.

For the year ended December 31, 2013, the Company issued nine notes to a company which was controlled and is currently owned by the Company’s former CEO in aggregate of $440,000 with interest at 12% per annum and payable on demand. As of December 31, 2013, the Company had repaid the notes inclusive of accrued interest of $10,117 thereon.

During the period of October 6, 2014 through December 1, 2014, the Company issued four six-month notes to the Company’s former CEO in aggregate of $135,000 which bear interest at 8% per annum and are secured by substantially all the assets of the Company. The notes are outstanding as of December 31, 2014. As of December 7, 2015, the Company had repaid $65,000.

On December 15, 2014, the Company issued a six-month note in the principal amount of $65,000 bearing interest at 8% per annum to a company for which the Company’s former CEO is the majority shareholder and an officer of the company. During the year ended December 31, 2014, the note and accrued interest thereon was repaid in full.

INTEREST EXPENSE

Interest expense on notes payable for the years ended December 31, 2014 and 2013 was $235,065 and $73,958, respectively.

PRINCIPAL REPAYMENTS

During the years ended December 31, 2014 and 2013, the Company made aggregate principal repayments of $213,843 and $1,464,056 associated with convertible and non-convertible notes payable.