Debt Obligations

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Debt Obligations

NOTE 9

DEBT OBLIGATIONS

The following is a summary of the Company’s financing arrangements as of December 31, 2015 and 2014:

		2015				2014
Current portion of long term debt:
Mortgages and other term notes		$	—			$	—
Current portion of notes payable			402,322				677,572
Current portion of notes payable – related party			310,100				163,666
Note discounts			(47,341	)			(349,891	)
Total current portion of long term debt		$	665,081			$	491,347

Current portion of convertible debentures:
TCA Global Credit Master Fund, L.P., 11% interest, conversion at 85% of market		$	2,900,000				—
Better Half Bloodstock, Inc., 0% interest, conversion at 90% of market			50,000				—
Dakota Capital, 6% interest, conversion at 90% of market			549,723				—
EFG Bank, 6% interest, conversion at 90% of market			117,948				—
Empire Equity, 6% interest, conversion at 90% of market			113,768				—
Epelbaum Revocable Trust, 6% interest, conversion at 90% of market			91,252				—
JMC Holdings, LP, 6% interest, conversion at 90% of market			140,380				—
David Moran & Siobhan Hughes, 6% interest, conversion at 90% of market			2,399				—
Susan Schneider, 6% interest, conversions at 90% of market			10,510				—
Mountainville Ltd., 6% interest, conversions at 90% of market			1,190,446				—
TRK Management LLC, 6% interest, no conversion discount			100,000				—
Cantrell Winsness Technologies, LLC, 2% interest, conversion at 100% of market			75,000				—
Minority Interest Fund (II), LLC, 6% interest, conversion at 90% of market			1,517,830				—
Long Side Ventures, 6% interest, conversion at 90% of market			85,000				—
Related Party Debenture, 6% interest, no conversion discount			59,440				—
112359 Factor Fund LLC, 6% interest, net of discount			—				690,184
FLUX Carbon Starter Fund LLC, 6% interest, no conversion discount			255,000				—
Five Nine Group LLC, 6% interest, no conversion discount			250,000				—
Asher Enterprises, Inc. 8% interest, conversion at 59% of market, net of discount							16,798
Donald Wachelka, 8.5% interest, conversion at $0.10			-				50,000
Convertible note related party, conversion at $0.05			—				150,000
Settlement Contingency Debentures			240,000				101,000
Total current portion of convertible debentures		$	7,748,696			$	1,007,982

Long term convertible debentures:
Gerova Asset Backed Holdings, LP, 2% interest, no conversion discount		$	175,000			$	—
Cantrell Winsness Technologies, LLC, 2% interest, conversion at 100% of market			325,000				—
Long Side Ventures, 6% interest, conversion at 90% of market			225,586				—
EXO Opportunity Fund, LLC, 6% interest, conversion at 90% of market			4,500,000				—
Note discount			(4,500,000	)			—
Total long term convertible debentures		$	725,586			$	—

A total of $12,974,282 in principal from the convertible debt noted above is convertible into the common stock of the Company. The following chart is presented to assist the reader in analyzing the Company’s ability to fulfill its fixed debt service requirements as of December 31, 2015 and the Company’s ability to meet such obligations:

Year		Amount
2016		$	8,461,118
2017			4,625,000
2018			600,586
2019			—
2020			—
Thereafter			—
Total minimum payments due under current and long term obligations		$	13,686,704

TCA CREDIT LINE

On December 31, 2015, Bitzio and each of its subsidiaries entered into a Senior Secured Revolving Credit Facility Agreement (the “Credit Agreement”) with TCA Global Credit Master Fund, LP (“TCA”). Pursuant to the Credit Agreement, TCA loaned $2,900,000 to Bitzio on December 31, 2015. The Credit Agreement contemplates that the lending limit may be increased to $5,000,000, on Bitzio’s request and at TCA’s discretion, provided that amount of loans outstanding under the Credit Agreement will be capped based upon lending ratios specified in the Credit Agreement. A total of $2,500,000 from the amount loaned on December 31, 2015 was used by Bitzio to purchase the Series G shares from GreenShift, as described above (see Note 5, Shareholder’s Equity, above).

The $2.9 million loan made on December 31, 2015 is, and any future loan will be, reflected in a Senior Secured Revolving Convertible Promissory Note (the “TCA Note”), which has a maturity date of December 31, 2016. The TCA Note bears interest at 11% per annum. In the event of a default under the TCA Note or with the consent of Bitzio, TCA may convert portions of principal and interest due under the TCA Note into shares of Bitzio common stock at a conversion price equal to 85% of the lowest daily volume weighted average price of Bitzio common stock during the five trading days preceding conversion; provided, however, that no conversion is permitted that will result in the Note-holder becoming the beneficial owner of more than 4.99% of Bitzio’s outstanding common stock. The Credit Agreement required that Bitzio pay an advisory fee to TCA in the amount of $3,200,000. Payment was made on December 31, 2015 by the issuance of 320,000 shares of Series E Preferred Stock to TCA. To secure its obligations under the Note and Credit Agreement, Bitzio pledged to TCA all of its assets, as did each of Bitzio’s subsidiaries.

FACTOR FUND DEBENTURE

On August 5, 2014, the Company issued a $650,000 convertible debenture to 112359 Factor Fund LLC (“Factor Fund”) for $325,000 in cash, paid between August 2014 and May 2015. The debenture carried interest at 8% per annum, and converted into Company common stock at a conversion price equal to 100% of the average of the five (5) lowest closing market prices for the common stock for the sixty trading days preceding conversion, but may not convert into a number of shares that would result in the holder owning beneficially more than 9.99% of the Company’s outstanding shares. On February 26, 2015, Factor Fund assigned the balance due under the foregoing debenture in two equal $325,000 portions to its members, Five Nine Group LLC (“Five Nine”) and FLUX Carbon Starter Fund LLC (“FCSF”). On the same date, the Company additionally issued convertible debentures with a principal balance of $534,888 to Factor Fund in exchange for debentures issued to Factor Fund in prior periods. The issued amount was then assigned in two equal portions to Factor Fund’s members, Five Nine and FCSF. A total of $592,444 was due as of February 26, 2015, to each Five Nine and FCSF as a result of the foregoing transactions. Of the amount assigned to FCSF, $108,560 of principal plus $16,440 of interest was transferred to Long Side Ventures LLC (“LSV”). The holder of each debenture may convert the principal and interest accrued on the A&R Debentures into common stock at a conversion price equal to 100% of the average of the five (5) lowest closing market prices for the common stock for the sixty trading days preceding conversion, but may not convert into a number of shares that would result in the holder owning beneficially more than 4.99% of the Registrant’s outstanding shares. The Company accounted for the foregoing transfers as an extinguishment of debt and recorded a loss on extinguishment of $938,489.

On December 31, 2015, Five Nine and FCSF agreed to exchange 100% of their respective right, title and interest, in to and under all amounts assigned from Factor Fund and otherwise due to each party in exchange for two $250,000 debentures, one each issued to Five Nine and FCSF. The holder of each debenture may convert the principal and interest accrued on the A&R Debentures into common stock at a conversion price equal to 100% of the average of the five (5) lowest closing market prices for the common stock for the sixty trading days preceding conversion, but may not convert into a number of shares that would result in the holder owning beneficially more than 9.99% of the Registrant’s outstanding shares. Per ASC 470-50-40-10 the exchange of debt instruments between or a modification of a debt instrument by a debtor and a creditor in a non troubled debt situation is deemed to have been accomplished with debt instruments that are substantially different if the present value of the cash flows under the terms of the new debt instrument is at least 10 percent different from the present value of the remaining cash flows under the terms of the original instrument. The company found that the present value of the cash flows of the new debt instrument was at least 10% different from the present value of the remaining cash flows of the original instrument. Therefore, debt extinguishment accounting rules apply. Accordingly, the reissued convertible notes payable were initially recorded at fair value, with a gain on extinguishment of debt of $639,667 for the difference in the fair value of the new notes compared to the carrying value of the old notes.

YA GLOBAL INVESTMENTS, L.P.

On December 31, 2015, YA Global Investments, LP (“YA Global”) and GreenShift entered into a Settlement Agreement pursuant to which YA Global split its outstanding debt into two debentures, a $14,196,897 debenture and a $5,000,000 debenture; and then accepted, in satisfaction of $14,196,897 of principal and interest accrued on debentures previously issued by GreenShift, a cash payment of $2,000,000, and the execution of a participation agreement by GreenShift and its affiliates. The $5 million debenture was assigned to EXO Opportunity Fund LLC (“EXO”) on the same date. The participation agreement provides that, for an indefinite term, GreenShift and its subsidiaries will pay to YA Global an amount equal to 15% of all payments received by the Company from any new licensees issued in connection with its intellectual properties, including any amounts awarded in the Company’s pending and future infringement matters, net of any legal fees and expenses incurred in obtaining the settlement or award. The balance due to YA Global, including all convertible debt, was paid and satisfied in full as a result of the foregoing transactions.

On the same date, GreenShift deposited $400,000 in cash into escrow in anticipation of settling an additional $2,939,000 in principal and interest due from GreenShift to various assignees of YA Global (“YAGI Assignees”). The relevant agreement provided that the YAGI Assignees had until March 31, 2016, to accept their respective share of the settlement amount. All but three of the assignees, corresponding to about $25,000 in debt, accepted the settlement terms as of such date; in turn corresponding to a total of an additional $2,914,000 in debt elimination during the first quarter 2016 (see Note 22, Subsequent Events, below).

The terms of the $5 million debenture assigned to EXO and the $25,000 balance due to the YA Global assignees noted above are nearly identical. Each debenture bears interest at 6% per annum, and each holder has the right, but not the obligation, to convert any portion of the debenture into GreenShift’s common stock at a rate equal to 90% of the lowest daily volume weighted average price of GreenShift’s common stock during the 20 consecutive trading days immediately preceding the conversion date. The debentures mature on December 31, 2017. The debentures also contain a “buy-in” provision in regards to potential cash-settled portion of any conversion.

GreenShift accounted for the foregoing debentures in accordance with ASC 815, Derivatives and Hedging, as the conversion feature embedded in each debenture could result in the note principal being converted to a variable number of GreenShift’s common shares.

GreenShift determined the aggregate value of the YAGI Assignee debentures at December 31, 2014, to be $1,605,782 which represented the aggregate face value of the debentures of $1,445,266 plus the present value of the conversion feature. During the year ended December 31, 2015, GreenShift made payments against the YAGI Assignee debentures which resulted in a $25,227 reduction of the fair value of the conversion liability for the period. In addition, the value was reduced by $400,804 for conversion features eliminated upon retirement of the related debentures (see below) as well as a reduction of $16,655 due to conversions during the period. During the year ended December 31, 2015, a value of $16,655 was recognized for conversion features and accretion to fair value for new debentures assigned during the period. The carrying value of the YAGI Assignee debentures was $2,518,167 as of December 31, 2015, including principal of $2,266,426 and the value of the conversion liability. The present value of the liability for the conversion feature has reached its estimated settlement value of $251,760 as of December 31, 2015. Interest expense of $122,156 for these obligations was accrued for the year ended December 31, 2015.

GreenShift is prohibited under its loan agreements from issuing common shares at prices lower than those afforded to EXO in the absence of EXO’s prior consent. The EXO Debenture provides for adjustments to the conversion price to the extent that GreenShift issues equity at a lower price in the future. As a result, in any such event, EXO would have the right to receive common shares upon conversion of the EXO Debenture at rates equal to the relevant lower rates. A note discount of $5,000,000 and a derivative liability of $7,484,632 were recorded at the time of the assignment. GreenShift accounted for the EXO Debenture in accordance with 815-40, Derivatives and Hedging, as the conversion feature embedded in the EXO Debenture could result in the note principal being converted to a variable number of GreenShift’s common shares. The balance of the EXO Debenture (including the related note discount) was $4,500,000 at December 31, 2015. At December 31, 2015, GreenShift valued the conversion features using a Black-Scholes model with a weighted probability calculation of the conversion price reset feature and the following assumptions: dividend yield of zero, years to maturity of 2.0 years, Discount rate of 0.14 percent, and annualized volatility of 296%. During the year ended December 31, 2015, the change in the fair value of the derivative resulted in an accounting gain of $248,463. As of December 31, 2015, the fair value of the derivative liability was $6,736,169.

As of December 31, 2010, GreenShift had convertible debentures payable to Minority Interest Fund (II), LLC (“MIF”) in an aggregate principal amount of $3,988,326 (the “MIF Debenture”) and convertible debentures payable to Viridis Capital LLC in an aggregate principal amount of $518,308 (the “Viridis 2010 Debenture”). Effective October 1, 2015, MIF assigned $557,500 of its convertible debt to EXO (the “EXO Debenture”). As of December 31, 2015, MIF assigned $100,000 of its balance to TKR Management LLC. During the year ended December 31, 2014, $95,390 and $70,812 in principal was converted into common stock as of December 31, 2015 and 2014, respectively. As of December 31, 2015, the balances of the EXO, TKR, MIF and Viridis Debentures were $0, $100,000, $1,517,830, and $0, respectively.

During the year ended December 31, 2015, GreenShift issued a $400,000 convertible debt to Cantrell Winsness Technologies, LLC (“CWT” and the “CWT Debenture”) in exchange for all amounts accrued under the technology agreement and CWT’s interest in the Series F Preferred Stock. CWT shall have the right, but not the obligation, to convert any portion of the convertible debenture into GreenShift’s common stock at $0.001 per share. The CWT Debenture matures December 31, 2018. The balance of the CWT Debenture was $400,000 at December 31, 2015.

During the year ended December 31, 2012, GreenShift incurred $175,000 in convertible debt to Gerova Asset Back Holdings, LP (“Gerova” and the “Gerova Debenture”). Gerova shall have the right, but not the obligation, to convert any portion of the convertible debenture into GreenShift’s common stock at a rate equal to 100% of the closing market price for GreenShift’s common stock for the day preceding the conversion date. The Gerova Debenture matures December 31, 2018. Gerova delivered a release in favor of GreenShift in respect of any and all amounts that may have been due under GreenShift’s former guaranty agreement with Gerova. The balance of the Gerova Debenture was $175,000 at December 31, 2015. Interest expense of $3,500 for these obligations was accrued for the year ended December 31, 2015.

During the year ended December 31, 2013, Minority Interest Fund (II), LLC assigned $200,000 of its convertible debt to Nicholas J. Morano, LLC (“Morano” and the “Morano Debenture”). Morano shall have the right, but not the obligation, to convert any portion of the accrued interest into GreenShift’s common stock at 100% of the market price for GreenShift’s common stock at the time of conversion. During the year ended December 31, 2014, $75,746 in principal was converted into common stock. Morano released GreenShift from its obligation to pay off the remaining balance on the debenture. The balance of principal and interest due under the Morano Debenture was $0 at December 31, 2015.

Effective December 31, 2015, Minority Interest Fund (II), LLC assigned $100,000 of its convertible debt to TRK Management, LLC (“TRK” and the “TRK Debenture”). TRK shall have the right, but not the obligation, to convert any portion of the accrued interest into GreenShift’s common stock at 100% of the market price for GreenShift’s common stock at the time of conversion. The balance of the TRK Debenture was $100,000 at December 31, 2015.

ASHER ENTERPRISE INC.

On March 4, 2014, the Company issued an 8% convertible promissory note in the aggregate principal amount of $37,500 to an accredited investor. The note has a maturity date of December 10, 2014. The note is convertible into shares of our common stock at a conversion price of 59% of the average of the three (3) lowest per share market values during the ten (10) trading days immediately preceding a conversion date. The Company accounted for the conversion feature as a derivative valued at $253,302, of which $37,500 was recorded as a debt discount to be amortized over the life of the note. The remaining $215,802 was expensed immediately to interest expense. As of December 31, 2014, the note and accrued interest was fully repaid.

On April 14, 2014, the Company issued an 8% convertible promissory note in the aggregate principal amount of $37,500 to an accredited investor. The note has a maturity date of January 18, 2015. The note is convertible into shares of our common stock at a conversion price of 59% of the average of the three (3) lowest per share market values during the ten (10) trading days immediately preceding a conversion date. During the year ended December 31, 2014, the Company recorded an interest expense of $1,500. The Company accounted for the conversion feature as a derivative valued at $48,244, of which $37,500 was recorded as a debt discount to be amortized over the life of the note. The remaining $10,744 was expensed immediately to interest expense. During the year ended December 31, 2014, the Company recorded an interest expense of $1,500. During the year ended December 31, 2014 $37,500 of principal was converted into 494,361,111 shares of the Company’s common stock.

On May 5, 2014, the Company issued an 8% convertible promissory note in the aggregate principal amount of $32,500 to an accredited investor. The note has a maturity date of February 9, 2015. The note is convertible into shares of our common stock at a conversion price of 59% of the average of the three (3) lowest per share market values during the ten (10) trading days immediately preceding a conversion date. During the nine months ended September 30, 2015, the Company recorded an interest expense of $1,635. The Company accounted for the conversion feature as a derivative valued at $36,411, of which $32,500 was recorded as a debt discount to be amortized over the life of the note. The remaining $3,911 was expensed immediately to interest expense. As of September 30, 2015, the note and accrued interest was fully repaid.

On August 20, 2014, the Company issued an 8% convertible promissory note in the aggregate principal amount of $20,500 to an accredited investor. The note has a maturity date of May 15, 2015. The note is convertible into shares of our common stock at a conversion price of 59% of the average of the three (3) lowest per share market values during the ten (10) trading days immediately preceding a conversion date. During the nine months ended September 30, 2015, the Company recorded an interest expense of $606. The Company accounted for the conversion feature as a derivative valued at $31,689, of which $20,500 was recorded as a debt discount to be amortized over the life of the note. The remaining $11,189 was expensed immediately to interest expense. As of December 31, 2015, the note and accrued interest was fully repaid.