Quarterly report pursuant to sections 13 or 15(d)

Acquisition

v2.4.0.8
Acquisition
 6 Months Ended
Jun. 30, 2013
Acquisition [Abstract]  
ACQUSITIONS
3.             ACQUSITIONS
 
BEAM LLC ACQUISITION
 
On February 26, 2013, the Company, entered into an equity exchange agreement (the “Exchange Agreement”) by and among the Company, Beam Acquisition LLC, a Nevada limited liability company and wholly-owned subsidiary of the Company (“Beam Acquisition”), Beam Charging LLC, a New York limited liability company (“Beam”), and Manhattan Charging LLC, a New York limited liability company (“Manhattan Charging”), Eric L’Esperance (“L’Esperance”), and Andrew Shapiro (“Shapiro” and together with Manhattan Charging, L’Esperance and the individual members of Manhattan Charging LLC, the “Beam Members”). The Company had previously entered into an agreement, dated December 31, 2012, (the “Initial Agreement”) with Beam Acquisition and Manhattan Charging, pursuant to which Beam Acquisition acquired all of the outstanding membership interests in Beam in exchange for 1,265,822 restricted shares (the “Exchange Shares”) of the Company’s common stock, par value $0.001 (the “Common Stock”) valued at $1,645,569, valued based on the market price on the date of issuance, subject to certain conditions to be met. In the Exchange Agreement and after the conditions had been met, the Company, through Beam Acquisition, further identified the specific terms under which it acquired all of the outstanding membership interests of Beam and Beam became a wholly owned subsidiary of Beam Acquisition (the “Equity Exchange”).
 
As part of the Equity Exchange, the Company issued an aggregate amount of $461,150 of promissory notes (the “Promissory Notes”) to Manhattan Charging and paid $38,850 in transaction costs. The Promissory Notes accrue interest at a rate of 6% per annum on the aggregate principal amount,  and was paid on April 15, 2013 (the “Maturity Date”).
 
Prior to the Equity Exchange, the Company entered into an Assignment of Promissory Note (the “Note Assignment”) with certain creditors of Beam (the “Creditors”), pursuant to which the Creditors sold to the Company two certain secured promissory notes (the “Notes”) totaling an aggregate principal amount of $130,000 and accrued interest of $33,292. In connection with the Note Assignment, the Company entered into an Amendment to the Promissory Note (the “Note Amendment”). Pursuant to the Note Amendment, the Notes held by the Company accrue interest at a rate of 8% per annum on the aggregate principal amount, payable on February 26, 2016. The Notes are secured by a lien on and continuing security interest in all of the Beam assets as described in the Note Amendment.
 
The Company acquired Beam in order to expand its presence in the New York City market and has accounted for the transaction as a business combination.  Pending the finalization of a valuation, the following table summarizes the preliminary fair value of assets acquired and liabilities assumed at the closing date:
 
 
   
February 26,
2013
  
Cash
  
$
69
  
Fixed assets, net
    
489,155
  
Amortizable intangible assets
    
1,467,000
  
Current liabilities
    
(631,945
)
 Net identifiable assets
    
1,324,279
  
Goodwill
    
782,440
  
Total consideration given
  
$
2,106,719
  
 
Acquisition related costs consisting of commission expense of $18,000 and legal fees of $20,850 are reflected as compensation and general and administrative expenses, respectively on the statement of operations for the six months ended June 30, 2013.
 
The fair value of intangible assets pending finalization of a valuation at February 26, 2013 consist of the following:
 
   
February 26,
2013
  
Provider agreements for locations awaiting installation of EV charging stations
  
$
829,000
  
Awarded government grants for installation of EV charging stations
    
638,000
  
   
$
1,467,000
  
 
The Exchange Agreement provided for an anti-dilution benefit to former members of Beam whereby until such time as a former member sells or disposes of all of his Company common shares of stock, any Triggering Event, as defined by the Agreement, whereby the issue price of the Company stock is below $1.58 shall cause the Company to issue a warrant to each former member to purchase an additional number of Company common shares at the Triggering Event price so as to preserve such Beam Member’s pre-Triggering Event percentage ownership in the Company.  From an historical perspective, the Company has raised capital through the issuance of stock and issued stock, options and warrants for services and compensation on a frequent basis since inception at various prices, differing vesting periods and differing expiration dates.  The Company has recorded warrants payable and a provision for warrants payable of $187,000 representing the fair value of the warrants, based on the Black Scholes valuation model, that would have been issued based on the Triggering Events occurring during the period of February 26, 2013 through June 30, 2013.  The Company can not estimate how long the former members will hold their stock, what market conditions will be when stock is sold and or when stock, options or warrants will be issued and under what terms of issuance as of the date of the acquisition.  It is for those reasons, that the Company can not estimate the amount of additional  consideration associated with the anti-dilution benefit.  The Company will continue to record warrants payables based on the occurrence of Triggering Events.
  
Synapse Acquisition
 
On April 3, 2013 (the “Closing Date”), the Company, entered into an equity exchange agreement (the “Exchange Agreement”) by and among the Company, EV Pass, LLC, a New York limited liability company (“EV Pass”) and Synapse Sustainability Trust, Inc., a New York non-profit corporation (“Synapse”) pursuant to which the Company acquired from Synapse (i) all of the outstanding membership interests in EV Pass;  (ii) the right to operate, maintain and receive revenue from 68 charging stations located throughout Central New York State (“CNY”) in exchange for 671,141 shares (the “Exchange Shares”) of the Company’s common stock, par value $0.001 (the “Common Stock”) valued at $791,946 valued based on the market value on the issuance date of the stock; and (iii) title to the registered trademark “EV Pass” (the “Equity Exchange”).
 
As part of the Equity Exchange, the Company made a cash payment of $25,000 to Synapse, on the Closing Date and $75,000 was issued in the form of a promissory note (the “Promissory Note”). The Promissory Note does not bear interest and is payable in three installment payments of $25,000 on each subsequent three month anniversary of the Closing Date.
 
On the Closing Date, the parties also executed (i) a Revenue Sharing Agreement wherein the Company agreed to pay Synapse 3.6% of the net revenues earned from all current and future charging units installed at any of the 68 CNY locations and (ii) a Bleed-Out Agreement pursuant to which Synapse agreed to limit its total daily trading of the Common Stock to no more than 5% of the total daily trading volume of the Company’s shares.
 
 
The Company purchased the assets of EV Pass to expand its presence in central New York State and is accounting for the transaction as a purchase of a collection of assets and liabilities.  Pending the finalization of a valuation, the following table summarizes the preliminary fair value of assets acquired and liabilities assumed at the closing date:
 
   
April 3, 2013
  
Cash
  
$
652
  
Intangible assets
    
891,408
  
Current liabilities
    
(114
)
 Net identifiable assets
    
891,946
  
Total consideration given
  
$
891,946
  
 
There were no acquisition costs associated with this transaction.
 
The fair value of intangible assets pending finalization of a third party valuation at April 3, 2013 consist of the following:
 
   
April 3, 2013
  
Provider agreements for locations awaiting installation of EV charging stations
  
$
441,408
  
Trademark
    
300,000
  
Present value of EV charging stations to be acquired in October 2016
    
150,000
  
   Total
  
$
891,408
  
 
350Green Acquisition
 
On April 22, 2013 (the “Closing Date”), the Company entered into an addendum (the “Addendum”) to an equity exchange agreement, dated March 8, 2013 (the “Exchange Agreement ”), by and among the Company, 350 Holdings, LLC, a Florida limited liability company (“CCGI Sub”), 350 Green, LLC, a Virginia limited liability company (“350 Green”), Mariana Gerzanych (“Gerzanych”), and Timothy Mason (“Mason” and, together with Gerzanych, the “350 Members”) for the acquisition of 350 Green.
 
350 Green operates a scalable network of plug-in electric vehicle (“EV”) charging stations across the U.S. It distributes its stations by partnering with retail hosts at select, high-traffic shopping centers and other places where EV drivers live and work, to create an expansive and convenient network of EV charging locations.  The Company undertook the acquisition to expand its footprint of deployed EV charging stations.
 
Pursuant to the Addendum, the Company (through CCGI Sub) acquired all the membership interests of 350 Green from the 350 Members in exchange for $1,219,757 of which: (a) $719,757, valued at the market price on the date of issuance, was paid in the form of 604,838 unregistered shares of the Company’s common stock, par value $0.001 (such shares, the “Exchange Shares”), and (b) $500,000 was paid in the form of a promissory note (the “Promissory Note”) payable to the 350 Members (the “Equity Exchange”). The Promissory Note does not bear interest and is payable in the following installments: (i) a payment of $10,000 on the Closing Date, (ii) an additional $10,000 payment on the thirty (30) day anniversary of the Closing Date, and (iii) monthly installments in the amount of $20,000 thereafter until paid in full.  Based on the life of the note, the Company imputed interest at 12% per annum and recorded the note at its present value of $444,768 on the date of issuance.  The Company has made payments of principal and interest totaling $40,000 as of June 30, 2013.
 
In connection with the Equity Exchange, the Company entered into a right of first refusal agreement (the “ROFR Agreement”) between the Company and the 350 Members pursuant to which the Company obtained a right of first refusal to participate in any and all EV charging and infrastructure related business opportunities presented to the 350 Members for one (1) year following the Closing Date. If the Company participates in business opportunities presented to it by the 350 Members pursuant to the ROFR Agreement that results in the Company installing EV charging stations (each an “EV Station”), the Company shall pay the 350 Members $250 for the first station, $125 for each additional EV Station, and 1% of any revenues generated by each EV Station for five (5) years from date of installation. The 350 Members are not currently, and will not be, affiliated with, nor employees of, the Company in any way in the future.
 
On October 19, 2010, 350 Green was awarded a grant from the City of Chicago to install and maintain an EV charging network throughout the city pursuant to a grant agreement (the “Grant”). On or about June 14, 2012, the City of Chicago delivered a Notice of Default to 350 Green citing, among other deficiencies, that all work had stopped on the Grant project because of 350 Green’s failure to pay its subcontractors and that 350 Green had made misrepresentations with regard to such payments and financial obligations. On February 5, 2013, the Company and the City of Chicago accepted a Preliminary Terms of Approval of Transfer of Grant Agreement (the “Terms of Approval”) that set forth (i) that the Company will be allowed to receive assignment of the Grant if it, among other criteria, settles all of the outstanding claims by the unpaid subcontractors and finishes the Grant project pursuant to a revised scope and budget and (ii) that the City of Chicago will release 350 Green and the Company from any and all liability with respect to misrepresentations regarding payments and financial obligations made by 350 Green prior to the Closing Date. The 350 members will not receive a release as part of this settlement with the City of Chicago.
 
On March 1, 2013, the City of Chicago delivered approval of the Equity Exchange (the “Chicago Approval”).
 
On April 22, 2013, the Company acquired 350 Green, and 350 Green became a wholly-owned subsidiary of CCGI Sub.
 
The Company has accounted for the transaction as a business combination.  Pending the finalization of a valuation, the following table summarizes the preliminary fair value of assets acquired and liabilities assumed at the closing date:
 
 
 
   
April 22, 2013
  
Cash
  
$
33,632
  
Fixed assets, net
    
4,137,166
 
Amortizable intangible assets
    
1,792,133
  
Current liabilities
    
(4,213,799
)
Deferred revenue
    
(2,527,402
)
 Net identifiable liabilities
    
(778,270
)
Goodwill
    
1,942,795
  
Total consideration given
  
$
1,164,525
  
 
The fair value of intangible asset pending finalization of a valuation consists of provider agreements for locations awaiting installation of EV charging stations.
 
The revenues and net loss of the acquirees as of their respective acquisition dates included in the consolidated statements of operations for the six months ended June  30, 2013 is as follows:
 
   
Car
Charging
Group Inc.
    
Beam
Charging
LLC
    
350Green
LLC
    
Total
  
Revenues
  
$
54,250
    
$
25,292
    
$
13,772
    
$
93,314
  
Net Loss
  
$
(7,069,084
)
  
$
(414,540
)
  
$
(379,853
)
  
$
(7,863,477
)
 
The pro forma revenues and net loss of Car Charging Group, Inc. and the the acquirees as if the acquisitions occurred as of January 1, 2013 and for the period ended June 30, 2013 is as follows:
 
   
Car
Charging
Group Inc.
    
Beam
Charging
LLC
    
350Green
LLC
    
Total
  
Revenues
  
$
54,250
    
$
26,052
    
$
152,066
    
$
232,368
  
Net Income (Loss)
  
$
(7,069,084
)
  
$
(368,798
)
  
$
(869, 352
)
  
$
(8,307,234
)
 
The pro forma revenues and net loss of Car Charging Group, Inc. and the the acquirees as if the acquisitions occurred as of January 1, 2012 and for the period ended June 30, 2012 is as follows:
 
   
Car
Charging
Group Inc.
    
Beam
Charging
 LLC
    
350Green
 LLC
    
Total
  
Revenues
  
$
237,487
    
$
1,000
    
$
276,856
    
$
515,343
  
Net Income (Loss)
  
$
(2,431,022
)
  
$
(73,283
)
  
$
(1,359,218
)
  
$
(3,863,523
)