Stockholders' Deficit

6 Months Ended

Jun. 30, 2014

15. STOCKHOLDERS’ DEFICIT

Series A Convertible Preferred Stock (“CPS”) and Derivative Liability

On July 23, 2012 and in relation with the LEC Acquisition (Note 4), the Company issued 300,000 shares of restricted preferred stock to two LEC Directors as a covenant not to compete. The preferred shares are fully forfeitable in the event the Directors terminated their employment or violated the non-compete provision before the third year anniversary. Additionally, these preferred shares were valued at $5.00 per share and were recorded as part of the purchase price.

On or about September 29, 2012, the Company issued an additional 30,000 CPS to FMS to settle $150,000 of advances owed to FMS (see Note 4) at a conversion rate of $5.00 per CPS.

On or about December 26, 2012, the Company issued an additional 53,680 CPS to FMS for cash at a price of $5.00 per CPS.

On or about December 26, 2012, the Company issued an additional 12,121 CPS to FMS for cash at a price of $8.25 per CPS.

On or about February 15, 2013, FMS converted 62,500 Series A preferred shares into 20,437,331 shares of our common stock.

On or about March 6, 2013, the Company issued an additional 21,841 CPS to FMS for cash at a price of $8.25 per CPS in settlement of $180,188 advances from related party.

On or about July 26, 2013, the Company issued an additional 95,485 CPS to FMS for cash, 51,387 at a price of $5 per CPS and 44,098 at a price of $8.25 per CPS in settlement of $620,743 advances from related party.

On or about July 29, 2013, 42,152 Series A Preferred Shares were converted into 16,156,335 shares of our common stock.

On or about November 27, 2013 the Company issued an additional 15,891 CPS to FMS for cash, 2,800 at a price of $5 per CPS and 13,091 at a price of $8.25 per CPS in settlement of $122,001 advances from related party.

On January 7, 2014 the Company issued 27,000 CPS to two investors for settlement of liability, these shares were valued at $210,000.

During the period from January 9, 2014 to March 31, 2014, 38,665 shares of CPS were converted into 19,386,464 common shares.

On or about April 11, 2014 a holder of Series A Preferred shares of the Company converted 125,000 Series A Preferred Stock into 66,875,000 restricted shares of the Company’s common stock. The shares issued for the Series A Preferred stock represented 11.05% of the Company’s shares issued and outstanding as of April 11, 2014.

On or about May 28, 2014 the Company converted 5,000 Series A Preferred Stock into 2,289,220 shares of its common stock.

The CPS is convertible into Company’s common stock in accordance with the following formula:

No. of common shares to be issued upon conversion of CPS =

No. of common stock outstanding on date of conversion x 0.000001 x No. of preferred stock being converted.

Due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion option embedded in the CPS, the conversion feature is classified as derivative liabilities and recorded at fair value.

Pursuant to ASC 815, “Derivatives and Hedging,” the Company initially recognized the fair value of the embedded conversion feature of the CPS on date of issuance and was charged to operations. On June 30, 2014, the Company recorded a mark-to-market adjustment based on the fair value of the derivative liability on that date which resulted in a gain of $56,465,415. The fair value of the derivative liability was determined using the Black Scholes option pricing model with a quoted market price of $0.016, a conversion price of $0.05, expected volatility of 176%, no expected dividends, an expected term of one year and a risk-free interest rate of 0.11%. As of June 30, 2014, the number of common shares that could be potentially issued to settle the conversion of the preferred stock (net of 200,000 forfeit shares) is 375,043,538 common shares.

The following table sets forth by level with the fair value hierarchy the Company’s financial assets and liabilities measured at fair value on June 30, 2014.


	Level 1		Level 2		Level 3		Total
Assets
None	$	-	$	-	$	-	$	-
Liabilities
Derivative Financial instruments	$	-	$	-	$	13,836,954	$	13,836,954

The following table summarizes the derivative liabilities included in the condensed consolidated balance sheet at June 30, 2014:


Balance at January 1, 2014	$	71,752,773
Derivative liability related to new issuance and conversion, net		(1,450,404)
Change in Value of Historic Derivatives		(56,465,415)
Balance at June 30, 2014 (unaudited)	$	13,836,954

Common Stock

On or about February 15, 2013 FMS converted 62,500 Preferred A shares into 20,437,331 shares of our common stock. On or about February 15, 2013, we issued 375,000 shares of our common stock to Kodiak Capital Group LLC worth $150,000 as part of the Kodiak Funding Agreement. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, and the investor was either accredited or sophisticated and familiar with our operations.

On or about February 15, 2013, we issued 160,715 shares of our common stock to Colin Manners (part of Kodiak Capital Group LLC) worth $64,286 as part of the Kodiak Funding Agreement. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, and the investor was either accredited or sophisticated and familiar with our operations.

On March 18, 2013, the Company entered into a funding agreement for up to $3 million with Kodiak Capital Group LLC, a Newport Beach-based institutional investor. The Company has agreed to file a registration statement with the U.S. Securities & Exchange Commission (“SEC”) covering the shares that may be issued to Kodiak under the terms of the common stock purchase agreement. As a result of the current market price for the Company’s common stock, the Company intends to withdraw the registration statement filing.

On or about April 1, 2013, the Company issued 1,712,999 shares to the owners of GoinGreen Limited (a UK company) to acquire 100% of the business. Due to the TRO the shares were not released by our transfer agent until June 24, 2013.

On or about May 9, 2013, the Company issued 1,050,000 shares of its common stock to Metro-Electric PLC to secure a 30% investment in the Powabyke brand of Electric Bikes owned by Metro-Electric PLC.

On or about May 9, 2013, the Company issued 1,500,000 shares of its common stock each to Gary Spaniak Sr. and Ron Davis to compensate them for Liberty Electric Cars Limited withdrawing from the Merger with ELCR in order to be acquired by GACR.

On or about July 18, 2013, the Company issued 27,000,000 shares of its common stock to Carter Read of which 5,000,000 was in relation to the purchase of Newport Coachworks, Inc. and 22,000,000 was in relation to Mr. Read securing purchase orders in excess of sixty (60) units.

On or about July 29, 2013, the Company converted 42,152 Series A Preferred Stock into 16,156,335 shares of its common stock.

On or about September 20, 2013, the Company issued 1,188,603 shares of its common stock. Of those shares, 1,046,618 were issued in connection with convertible debt, 27,939 were issued to a member of staff to retain their services, and 114,046 were issued in lieu of rent payments.

On or about October 16, 2013, the Company issued 500,000 shares of its common stock in connection with advisory services provided.

On or about November 8, 2013, the Company issued 625,461 shares of its common stock in connection with advisory services provided.

On or about November 18, 2013, the Company issued 50,000 shares of its common stock in connection with advisory services provided.

On or about December 11, 2013, the Company issued 7,700,000 shares of its common stock in connection with a 3(a)(10) arrangement with Ironridge.

On or about December 23, 2013, the Company issued 297,429 shares of its common stock to Redwood Management in connection with the repayment of convertible debt in the amount of $33,460.73.

On or about December 31, 2013, the Company issued 238,095 shares of its common stock to Redwood Management in connection with the repayment of convertible debt in the amount of $25,000.

During the three months ended March 31, 2014, the Company issued 19,644,299 shares in connection with debt conversion valued at approximately $555,490, mainly related to the LEC debt that was assumed by Redwood.

During the three months ended March 31, 2014, the Company issued 32,051 shares for $5,000 in cash to unrelated party.

During the three months ended March 31, 2014, the Company issued 278,133 shares as additional interest and penalties valued at $24,038.

During the three months ended March 31, 2014, the Company issued 78,792,270 shares in connection with liability settlement valued at approximately $4,993,110, mainly related to Ironridge settlement agreement and other liabilities related to consultants and two officers for accrued salary.

During the three months ended March 31, 2014, the Company issued 872,569 shares in connection with services provided to the company by outside consultants valued at approximately $64,000.

On or about April 2, 2014 the Company issued 1,200,000 shares of its common stock to JMJ Financial in connection with the repayment of convertible debt in the amount of $16,920.

On or about April 2, 2014 the Company issued 4,821,925 shares of its common stock to LG Capital in connection with the repayment of convertible debt in the amount of $51,500 plus $2,746in accrued interest.

On or about April 9, 2014 the Company issued 1,631,280 shares of its common stock to Auctus Private Equity Fund in connection with the repayment of convertible debt in the amount of $17,750 plus $1,646 in accrued interest.

On or about April 9, 2014 the Company issued 1,600,000 shares of its common stock to JMJ Financial in connection with the repayment of convertible debt in the amount of $22,560.

On or about April 11, 2014 the Company converted 125,000 Series A Preferred Stock into 66,875,000 shares of its common stock.

On or about April 14, 2014, the Company issued 212,500 shares of common stock in exchange to investor Maurice Graham Oates at $0.0400 per share for a total of $8,500.

On or about April 22, 2014 the Company issued 1,585,930 shares of its common stock to JMJ Financial in connection with the repayment of convertible debt in the amount of $22,742.23.

On or about May 23, 2014 the Company issued 540,000 shares of its common stock to Gel Properties in connection with the repayment of convertible debt in the amount of $4,472.

On or about May 28, 2014 the Company converted 5,000 Series A Preferred Stock into 2,289,220 shares of its common stock.

On or about May 30, 2014 the Company issued 900,000 shares of its common stock to Gel Properties in connection with the repayment of convertible debt in the amount of $7,453.

On or about June 3, 2014 the Company issued 1,578,767 shares of its common stock to Gel Properties in connection with the repayment of convertible debt in the amount of $13,075.

On or about June 5, 2014 the Company issued 4,262,943 shares of its common stock to Redwood Management in connection with the payment of accrued interest in the amount of $29,841.

On or about June 6, 2014 the Company issued 3,474,337 shares of its common stock to LG Capital Funding in connection with the repayment of convertible debt in the amount of $26,058 plus $1,058 in accrued interest.

On or about June 10, 2014 the Company issued 2,000,000 shares of its common stock to Gel Properties in connection with the repayment of convertible debt in the amount of $21,827.

On or about June 12, 2014 the Company issued 1,700,000 shares of its common stock to JMJ Financial in connection with the repayment of convertible debt in the amount of $15,810.

On or about June 17, 2014 the Company issued 290,753 shares of its common stock to Gel Properties in connection with the of repayment convertible debt in the amount of $3,173.

On or about June 17, 2014 the Company issued 400,000 shares of its common stock to a creditor of former CFO Darren West. In exchange, the accrued salary due Darren West was reduced $17,000.

On or about June 18, 2014 the Company issued 3,342,831shares of its common stock to LG Capital Funding in connection with the repayment of convertible debt in the amount of $25,000 plus $71in accrued interest.

On or about June 18, 2014 the Company issued 2,200,000 shares of its common stock to Gel Properties in connection with the repayment of convertible debt in the amount of $19,361.

On or about June 19, 2014 the Company issued 8,571,428 shares of its common stock to Redwood Fund III in connection with the repayment of convertible debt in the amount of $60,000.

On or about June 24, 2014 the Company issued 2,000,000 shares of its common stock for advisory services rendered in 2013 at $0.014 per share.

On or about June 27, 2014 the Company issued 7,462,686 shares of its common stock to Redwood Fund III in connection with the repayment of convertible debt in the amount of $40,000 plus $10,000 in accrued interest.

On or about June 27, 2014 the Company issued 640,736 shares of its common stock to Gel Properties in connection with the repayment of convertible debt in the amount of $5,639.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

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+ Details

Green Automotive Co 10-Q