Quarterly report pursuant to Section 13 or 15(d)

Accrued Expenses

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Accrued Expenses
9 Months Ended
Sep. 30, 2015
Payables and Accruals [Abstract]  
Accrued Expenses

5. ACCRUED EXPENSES

 

SUMMARY

 

Accrued expenses consist of the following:

 

    September 30, 2015     December 31, 2014  
    (unaudited)        
Registration rights penalty   $ 728,750     $ 2,569,788  
Obligation to U.S. Department of Energy     -       1,833,896  
Accrued consulting fees     894,725       936,862  
Due to Creditors Committee of the ECOtality Estate     -       1,035,965  
Accrued host fees     830,721       680,080  
Accrued professional, board and other fees     770,489       883,707  
Accrued wages     87,732       322,651  
Warranty payable     315,883       196,402  
Accrued taxes payable     171,163       146,577  
Warrants payable     109,127       63,533  
Accrued issuable equity     104,302       -  
Accrued interest expense     72,968       42,202  
Dividend payable     -       20,800  
Deferred rent     -       6,564  
Other accrued expenses     25,750       -  
    $ 4,111,610     $ 8,739,027  

 

REGISTRATION RIGHTS PENALTY

 

In connection with the sale of the Company’s common stock and warrants during the year ended December 31, 2013, the Company granted the purchasers and the placement agents registration rights on the common stock and warrants within 60 days of the date of the sale of the stock, as amended. The Stock Purchase Agreement (“SPA”) provided for a penalty provision of 1% of the gross proceeds for each month that the shares are not registered, not to exceed 10%. The Securities and Exchange Commission (“SEC”) notified the Company that it could not review its registration statement until such time as the Company furnished two years of audited financial statements of 350 Green and ECOtality as the acquisitions were deemed significant. The Company sought a waiver of the audit requirement but the SEC denied the granting of a waiver. On February 5, 2015, the holders of a majority of the shares affected by the registration rights penalty granted the Company the option to satisfy the accrued registration rights penalty and related interest as of December 23, 2014 totaling $1,724,823 in Series C Convertible Preferred Stock with a stated value of $100 per share, in lieu of cash. The Company elected this option which required the Company to pay a 20% premium causing the liability to increase to $1,850,188, exclusive of interest of $219,600. On February 10, 2015, the Company issued 20,414 shares of Series C Convertible Preferred Stock and on March 31, 2015, the Company issued the remaining 283 shares of Series C Convertible Preferred Stock, such that there was no liability as of September 30, 2015.

 

In connection with the sale of the Company’s Series C Convertible Preferred Stock during the nine months ended September 30, 2015 and the year ended December 31, 2014, the Company granted the purchasers registration rights. As of September 30, 2015 and December 31, 2014, the Company was not in a position to furnish two years of audited financial statements of 350 Green and ECOtality to the SEC, therefore the SEC is unable to review any registration statement, if submitted. As a result, the Company accrued $728,750 and $500,000 of Series C Convertible Preferred Stock registration rights penalties at September 30, 2015 and December 31, 2014, respectively, which represents 12.5% of the Series C Convertible Preferred Stock issuance dollar amount.

 

OBLIGATION TO U.S. DEPARTMENT OF ENERGY

 

In 2014, the U.S. Department of Energy (“DOE”) notified the Company that it continues to have a property interest in the 107 installed DCFCs if the fair market value of each DCFC had a market value in excess of $5,000 on October 16, 2013, the date of the Blink purchase agreement approved by the bankruptcy court. The DOE requested documentation describing the data, assumption and methodologies that the Company used to determine the value as of the closing date. The Company provided the DOE with additional documentation and calculations supporting its belief that each DCFC acquired as of the closing date of the Blink purchase agreement approved by the bankruptcy court had a fair market value of less than $5,000. On May 5, 2015, the DOE notified the Company that it agreed with the Company’s analysis and had determined that the DOE’s interest in the DCFCs was extinguished. As a result, the Company reversed the accrued liability in the second quarter of 2015 commensurate with the date of the DOE notification.

 

DUE TO CREDITORS COMMITTEE OF THE ECOTALITY ESTATE

 

On April 10, 2015, the consideration associated with the strategic transaction to acquire a 50% interest in the Reorganized Electric Transportation Engineering Corporation of America (“ECOtality”) was amended to an aggregate of $1,200,000, consisting of an initial payment of $375,000 (including $280,965 to be paid on behalf of the estate directly to their professional service providers and $94,035 representing forbearance of a Blink network receivable from the estate) and the issuance of 8,250 shares of Series B Convertible Preferred Stock. As of December 31, 2014, the Company had paid $70,000 and forborne the $94,035 receivable, such that the liability was $1,035,965. During the nine months ended September 30, 2015, the Company paid $210,965 and issued the Series B Convertible Preferred Stock, such that there was no liability as of September 30, 2015. See Note 9 – Stockholders’ Deficiency – Preferred Stock – Series B Convertible Preferred Stock for additional details.

 

WARRANTS PAYABLE

 

In conjunction with the Beam acquisition, the agreement provided for anti-dilution protection to former members of Beam until such time as a former member sells or disposes of all of his CCGI common stock. As specified in the agreement, if the Company issues securities below $1.58 (a “Triggering Event”), the Company is required to issue a warrant to each former member to purchase an additional number of Company common shares at the Triggering Event price. The Company has accrued for warrants payable based on the Triggering Events that have occurred through September 30, 2015, as discussed in Note 8 – Stockholders’ Deficiency. During the nine months ended September 30, 2015, the Company issued one-year warrants to purchase an aggregate of 304,450 shares of common stock at an estimated fair value of $25,563 to the former Beam members which was recorded as a $11,270 reduction of warrants payable and the remainder recorded to the change in fair value of derivative liability. The warrants had exercise prices ranging from $0.27 to $1.50 per share.

 

As of September 30, 2015, the Company accrued $108,616 related to investment banking fees which were payable in warrants. See Note 8 – Fair Value Measurement – Warrants Payable and Note 9 – Stockholders’ Deficiency – Preferred Stock - Series C Convertible Preferred Stock for additional details.