8. STOCKHOLDERS’ DEFICIENCY

PREFERRED STOCK

SERIES A CONVERTIBLE PREFERRED STOCK

See Note 10 – Commitments and Contingencies – Employment Agreement for details associated with the issuance of Series A Convertible Preferred Stock.

The Series A Convertible Preferred Stock shall have no liquidation preference so long as the Series C Convertible Preferred Stock shall be outstanding.

SERIES C CONVERTIBLE PREFERRED STOCK

See Note 5 – Accrued Expenses – Registration Rights Penalty and Note 10 – Commitments and Contingencies – Employment Agreement for details associated with the issuance of Series C Convertible Preferred Stock.

PREFERRED STOCK – CONTINUED

SERIES C CONVERTIBLE PREFERRED STOCK – CONTINUED

During the three months ended March 31, 2015, the Company issued 208 shares of Series C Convertible Preferred Stock in satisfaction of the $20,800 dividend for the period from December 23, 2014 through December 31, 2014 and 2,020 shares of Series C Convertible Preferred Stock in satisfaction of the $202,000 dividend for the three months ended March 31, 2015.

The Company did not meet the first set of milestones that were targeted for completion by March 31, 2015 ($2,000,000 was originally scheduled to be released) under the terms of the Series C Convertible Preferred Stock Securities Purchase Agreement dated December 23, 2014. However, during the three months ended March 31, 2015, $1,500,000 was released from escrow associated with the 2014 sale of Series C Convertible Preferred Stock. See Note 11 – Subsequent Events – Series C Convertible Preferred Stock for additional details.

In the event of a liquidation, the Series C Convertible Preferred Stock is also entitled to a liquidation preference equal to the stated value plus any accrued and unpaid dividends, which, as of March 31, 2015, was equal to $8,392,500. 

NON-CONTROLLING INTERESTS

350 Green is not owned by the Company but is deemed to be a VIE, therefore the entirety of its results of operations are consolidated in the Company’s financial statements. See Note 4 – Assets and Liabilities Transferred to Trust Mortgage – 350 Green for additional details.

Car Charging China was incorporated in the State of Delaware on June 24, 2010. Prior to 2015, Car Charging China had insignificant operations. On January 20, 2015, a three month agreement was entered into between CCGI, Car Charging China and a consultant whereby Car Charging China agreed to deliver to the consultant on a monthly basis $13,500 in cash and $10,000 in common stock of Car Charging China. As of March 31, 2015, Car Charging China had transferred 0.8% of its common stock (deemed to have de minimis value) to the consultant.

STOCK-BASED COMPENSATION

The Company recognized stock-based compensation expense related to preferred stock, common stock, stock options and warrants for the three months ended March 31, 2015 and 2014 of $1,760,234 and $519,840, respectively. As of March 31, 2015, there was $2,151,033 of unrecognized stock-based compensation expense related to stock options that will be recognized over the weighted average remaining vesting period of 1.4 years.

STOCK OPTIONS

See Note 10 – Commitments and Contingencies – Employment Agreement for details associated with the modification of certain stock options.

During the three months ended March 31, 2015, the Company issued five-year options to purchase 25,000 shares of the Company’s common stock at exercise prices ranging from $0.37 to $0.40 per share to members of the Board of Directors as compensation for attending Board meetings during this time. The options are fully vested and had an aggregate fair value of $7,559, which was expensed immediately.

During the three months ended March 31, 2015, the Company issued a five-year option to purchase 5,000 shares of the Company’s common stock at an exercise price of $0.36 per share to a member of the Board of Directors as compensation for attending meetings of the newly formed OPFIN Committee. The option vests in one year and had a grant date fair value of $1,026, which will be recognized over the one year service period.

In applying the Black-Scholes option pricing model to stock options granted, the Company used the following assumptions:

A summary of the option activity during the three months ended March 31, 2015 is presented below:

The following table presents information related to stock options at March 31, 2015:

STOCK WARRANTS

See Note 6 – Notes Payable for details associated with the issuance of a warrant in connection with a note extension. See Note 7 – Fair Value Measurement for details associated with the issuances of warrants to the former members of Beam.

On February 25, 2015, the Company entered into an agreement with certain investors in the October 2013 financing whereby the investors were issued warrants to purchase 3,336,734 shares of the Company’s common stock at an exercise price of $0.70 per share which vested immediately, expire five years from the date of issuance and contain weighted average anti-dilution and fundamental transaction provisions, as defined. These additional warrants represent the warrants the investors would have received as a result of the December 23, 2014 financing had they not previously surrendered their anti-dilution protection during 2014. The warrants, which were classified as derivative liabilities, had an aggregate fair value of $275,908, which was recognized immediately. Additionally, as a result of the December 23, 2014 financing, the exercise price of warrants to purchase an aggregate of 19,599,999 shares of common stock issued to the October 2013 and December 2013 investors was reduced to $0.70 per share. As the warrants are classified as derivative liabilities, the impact of the modification was included within change in fair value of warrant liabilities on the condensed consolidated statement of operations during the three months ended March 31, 2015.

The assumptions used in connection with the valuation of warrants were as follows:

A summary of the warrant activity during the three months ended March 31, 2015 is presented below:

The following table presents information related to warrants at March 31, 2015:

COMMON STOCK

See Note 10 – Commitments and Contingencies – Employment Agreement for details associated with the issuance of common stock.

During the three months ended March 31, 2015, the Company issued 73,755 fully vested shares of the Company’s common stock to members of the Board of Directors as compensation for attending Board meetings. The shares had a grant date fair value of $29,999 based on the trading price of the Company’s common stock on the dates of the respective meetings.

On February 3, 2015, the Company issued 50,000 fully vested shares of the Company’s common stock to a consultant to advise the Company about corporate governance matters. The consulting services expense valued at $50,000 was accrued for as of December 31, 2014.