| COMMITMENTS |
The Company has entered into several contracts that obligate it to future office space lease payments and consulting contracts for financial and investor relations services. The following is a summary of these commitments:
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a.
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On May 4, 2012, the Company entered into a 39 month lease for 4,244 square feet of office space in Miami Beach, Florida commencing as of June 1, 2012. The lease requires a security deposit of $33,952 and initial annual minimum rental payment of $135,808 with annual increase of approximately 3% over the life of the lease and a rent holiday for the first three months of the lease. The lease contains one-three year option to renew based upon notice as defined by the lease at prevailing rates at such time. The deferred rent on the Condensed Consolidated Balance Sheet at September 30, 2012 represents the excess of the minimum monthly straight line payments over the life of the lease over the actual lease payments made as of June 30, 2013 and December 31, 2012 respectively.
On June 22, 2012, the Company entered into a three year lease for 1,543 square feet of office space in San Jose, California commencing on April 1, 2012. The lease requires a security deposit of $7,869 and initial annual minimum rental payment of $29,626 with annual increase of approximately 3% over the life of the lease. The lease contains one-three year option to renew based upon notice as defined by the lease at prevailing rates at such time.
The Company subleases space in New York City on a month-to-month basis of $2,400 per month.
Total rent expense for the three months and six months ended June 30, 2013 and 2012 and for the period from September 3, 2009 (inception) through June 30, 2013 was $50,315, $51,018, $95,269, $53,487 and $397,085, respectively.
Future minimum monthly rental commitments relating to the Miami Beach and San Jose leases are as follows as of June 30, 2013:
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Year
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Amount
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2014
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$
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180,831
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2015
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164,930
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Total
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$
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345,761
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b.
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Pursuant to the terms of the amendment of June 30, 2012 master agreement, the Company has committed to purchase 500 charging stations over the year ended June 30, 2013, at prices ranging from $2,500 to $2,700 per unit. If the Company fails to take delivery of the total specified number units, it will be responsible for reimbursement of certain price discounts on units previously received. As of December 31, 2012, the Company has purchased 90 units under this master agreement. In the opinion of the Company’s management, the vendor has not performed in accordance with the terms of the master agreement. As of June 30, 2013, the ultimate resolution of this matter is unknown.
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c.
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The Company has a lawsuit pending for past due fees due to a consulting firm in the amount of $41,000. Although the outcome of this matter is uncertain, the Company has reserved for this amount in accounts payable and accrued expenses at June 30, 2013 and December 31, 2012. The parties are currently in the process of negotiating a settlement, and the Company anticipates that the matter will be resolved soon.
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d.
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In October 2012, a former officer and director of the Company resigned his position from the Company and filed a claim with the California Labor
Board (“Labor Board”) relating to certain compensatory matters. As of June 30, 2013, the matter was due to be scheduled for a hearing before the Labor Board. While the parties were in settlement negotiations, said negotiations rendered no result.
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e.
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On April 9, 2013, the Company filed a lawsuit in the U.S. District Court for the Southern District of New York against 350 Green, LLC (“350 Green”), Tim Mason and Mariana Gerzanych (“the 350 Members”), and JNS Holdings Corporation (“JNS”) (the “New York Lawsuit”). On April 22, 2013, the Company, 350 Green, and the 350 Members settled the New York Lawsuit, and formally closed the transaction for the Company to purchase the membership interests of 350 Green. The New York Lawsuit was subsequently dismissed by the Court on April 23, 2013.
In conjunction with the agreed dismissal of the New York Lawsuit, on April 25, 2013 the Company filed a new action against JNS in the United States District Court for the Northern District of Illinois (the “Illinois Lawsuit”). While the Company believes that it will prevail in the Illinois Lawsuit, the possibility exists that the Company may be required to sell the Chicago assets and pay JNS’ costs and attorneys’ fees. In such an instance, JNS would also be required to assume approximately $1.6 million of 350 Green’s liabilities.
On May 30, 2013, JNS filed a complaint against 350 Green, in federal court in Illinois (the “JNS Lawsuit”). Among other things, the JNS Lawsuit seeks indemnification from 350 Green for all actions, liabilities, lawsuits, expenses or damages associated with the Company’s alleged failure to close an Equity Exchange Agreement with 350 Green.
The Court recently consolidated the Illinois Lawsuit and the JNS Lawsuit. The cases are on an expedited briefing schedule, and are anticipated to be resolved soon.
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From time to time, the Company is a defendant or plaintiff in various legal actions which arise in the normal course of business. As such the Company is required to assess the likelihood of any adverse outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of the provision required for these commitments and contingencies, if any, which would be charged to earnings, is made after careful analysis of each matter. The provision may change in the future due to new developments or changes in circumstances. Changes in the provision could increase or decrease the Company’s earnings in the period the changes are made. It is the opinion of management, after consultation with legal counsel, that the ultimate resolution of these matters will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.
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