In connection with the sale of the Company’s stock during the quarter ended December 31, 2013, the Company sold 17,785,714 shares of its common stock and issued 17,785,714 warrants for gross proceeds of $15,450,000. In conjunction with these sales, the Company also issued 112,000 shares of common stock, 988,000 warrant units (each unit consisting of (1) a warrant to purchase a common share at $1.00 and (2) a warrant to purchase a common share at $1.05, and 112,000 warrants to placement agents valued at $68,755 with an exercise price of $1.05 exercisable for a five year period. The exercise price is subject to a full ratchet reset feature in the event of a dilutive issuance as defined. The fair value of the warrant granted, was estimated on the date of grant, using the multinomial lattice valuation model, using a volatility factor of 90.15%, a term of five years, a risk fee interest rate of 0.64% and a zero dividend yield. The Company granted the purchasers and the placement agents registration rights on both the shares and the underlying shares related to the warrants within 60 days of the date of the sale of the stock, as amended. The stock purchase agreement provided for a penalty provision imposed upon the Company of 1% of the gross proceeds per month for each month that the shares are not registered not to exceed 10%. As of February 9, 2014, the amended 60 day threshold, the Company had not filed a registration statement with the Securities and Exchange Commission (“SEC”) but subsequently filed on February 18, 2014 and amended its filing on May 13, 2014. The 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 was denied by SEC. As a result, the Company has accrued a liability for the maximum penalty amount as it cannot be determined when the registration statement will become effective but does not believe at this time that it is probable that it will be effective before the maximum penalty is reached. The Company has also accrued interest in the amount of $117,335 through September 30, 2014 at the rate of 18% per annum simple interest in accordance with the terms of the registration rights agreement. .

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 $1,726,336 in Series C Convertible Preferred Shares with a stated value of $100 in lieu of cash. The Company elected this option which required the Company to pay a 20% premium causing the liability to increase to $1,854,000, exclusive of interest of $140,802, resulting in a charge to operations of $311,000 for the three and nine months ended September 30, 2014. Incremental interest expense as of September 30, 2014 as a result of the Company’s election totaled $23,467. As of April 10, 2015, the Company issued 20,414 Series C Convertible Preferred shares of Stock representing substantially all of the value of the registration rights penalty and accrued interest thereon through December 23, 2014.