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Debt Obligations | 3 Months Ended
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Mar. 31, 2016
Debt Disclosure [Abstract] |
Debt Obligations |
NOTE 9 | DEBT OBLIGATIONS
The following is a summary of the Company’s financing arrangements as of March 31, 2016:
|  | 3/31/2016 |
Current portion of long term debt: |  |  |  |
Current portion of notes payable |  |  | 410,129 |
Current portion of notes payable – related party |  |  | 310,100 |
Note discounts |  |  | (36,762 | )
Total current portion of long term debt |  | $ | 683,467 |
Current portion of convertible debt: |  |  |  |
TCA Global Credit Master Fund, L.P., 11% interest, conversion at 85% of market |  | $ | 2,828,184 |
David Moran & Siobhan Hughes, 6% interest, conversion at 90% of market |  |  | 2,399 |
Susan Schneider, 6% interest, conversions at 90% of market |  |  | 10,510 |
TRK Management LLC, 6% interest, no conversion discount |  |  | 100,000 |
Minority Interest Fund (II), LLC, 6% interest, conversion at 90% of market |  |  | 1,489,283 |
Long Side Ventures, 6% interest, conversion at 90% of market |  |  | 85,000 |
Related Party Debenture, 6% interest, no conversion discount |  |  | 42,264 |
Abrams, 8% interest, no conversion discount |  |  | 40,000 |
FLUX Carbon Starter Fund LLC, 6% interest, no conversion discount |  |  | 255,000 |
Five Nine Group LLC, 6% interest, no conversion discount |  |  | 250,000 |
Cantrell Winsness Technologies, LLC, 2% interest, conversion at 100% of market |  |  | 125,000 |
Settlement Contingency Debentures |  |  | 200,000 |
Note discount |  |  | (2,803,646 | )
Total current portion of convertible debt |  | $ | 2,623,994 |
Long term convertible debt: |  |  |  |
Gerova Asset Backed Holdings, LP, 2% interest, no conversion discount |  | $ | 175,000 |
Cantrell Winsness Technologies, LLC, 2% interest, conversion at 100% of market |  |  | 200,000 |
Long Side Ventures, 6% interest, conversion at 90% of market |  |  | 220,977 |
EXO Opportunity Fund, LLC, 6% interest, conversion at 90% of market |  |  | 4,500,000 |
Note discount |  |  | (3,939,809 | )
Total long term convertible debt |  | $ | 1,156,168 |
A total of $10,523,617 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 (net of note discounts) as of March 31, 2016 and the Company’s ability to meet such obligations:
Year |  |  | Amount |
2016 |  |  | $ | 6,022,869 |
2017 |  |  |  | 125,000 |
2018 |  |  |  | 5,095,977 |
2019 |  |  |  | — |
2020 |  |  |  | — |
Thereafter |  |  |  | — |
Total minimum payments due under current and long term obligations |  |  | $ | 11,243,846 |
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 11, Shareholder’s Equity, below). 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. As of March 31, 2016, the balance of unamortized debt discount is $2,803,464. During three months ended March 31, 2016, the Company recorded amortization of debt discount of $86,636. During Q1 2016, Bitzio paid down $71,816 in principal on TCA Note and $85,258 in interest. During the same period Bitzio accrued $123,155 in interest and fees. 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 during the three months ended March 31, 2015. 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 YAGI 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 YAGI (“YAGI Assignees”). The relevant agreement provided that the YAGI Assignees had until March 31, 2016, to accept their respective share of the settlement amount. As of March 31, 2016, the Company paid a total of $379,574 to all but three of the YAGI Assignees, in settlement of about $2,914,000 in debt elimination, and a gain on extinguishment of debt of $2,551,613. 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, 2015, to be $2,518,167 which represented the aggregate face value of the debentures of $1,445,266 plus the present value of the conversion feature. During the three months ended March 31, 2016, GreenShift negotiated settlements with ten of the YAGI Assignee debentures which resulted in a $252,531 reduction of the fair value of the conversion liability for the period. In addition, the value was reduced $3,271 due to conversions during the period. The carrying value of the YAGI Assignee debentures was $14,341 as of March 31, 2016, including principal of $12,909 and the value of the conversion liability. The present value of the liability for the conversion feature has reached its estimated settlement value of $1,432 as of March 31, 2016. Interest expense of $193 for these obligations was accrued for the three months ended March 31, 2016. The Company 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 the Company 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. The Company 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 the Company’s common shares. The balance of the EXO Debenture (net of the $3,939,809 related note discount) was $560,191 at March 31, 2016. At March 31, 2016, the Company 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 1.75 years, discount rate of 0.14 percent, and annualized volatility of 323%. During the three months ended March 31, 2016, the change in the fair value of the derivative resulted in an accounting loss of $3,450,457. As of March 31, 2016, the fair value of the derivative liability was $10,186,626. OTHER DEBENTURES As of December 31, 2010, the Company had convertible debentures payable to Minority Interest Fund (II), LLC (“MIF”) in an aggregate principal amount of $3,988,326 (the “MIF Debentures”). 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 TRK Management LLC. During the three months ended March 31, 2016, $18,546 in principal was converted into common stock. As of March 31, 2016, the balances of the TRK, and MIF Debentures were $100,000 and $1,489,283, respectively. During the year ended December 31, 2015, the Company 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 the Company’s common stock at $0.001 per share. The CWT Debenture matures December 31, 2018. During the three months ended March 31, 2016, the Company paid CWT a total of $75,000. The balance of the CWT Debenture was $325,000 at March 31, 2016. During the year ended December 31, 2012, the Company 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 the Company’s common stock at a rate equal to 100% of the closing market price for the Company’s common stock for the day preceding the conversion date. The Gerova Debenture matures December 31, 2018. Gerova delivered a release in favor of the Company in respect of any and all amounts that may have been due under the Company’s former guaranty agreement with Gerova. The balance of the Gerova Debenture was $175,000 at March 31, 2016. Interest expense of $873 for these obligations was accrued for the three months ended March 31, 2016. 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 the Company’s common stock at 100% of the market price for the Company’s common stock at the time of conversion. The balance of the TRK Debenture was $100,000 at March 31, 2016. Interest expense of $1,496 for these obligations was accrued for the three months ended March 31, 2016.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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