Stockholders' Equity |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' Equity |
PREFERRED STOCK
The Company is authorized to issue 25,000,000 shares of preferred stock, of which 2,500,000 shares are designated as Series A Convertible Preferred Stock, 1,000,000 shares are designated as Series B Convertible Preferred Stock, 999 shares are designated as Series C Preferred Stock, 520,000 shares of Series E Preferred Stock, and 800,000 shares of Series F Preferred Stock, par value of $0.001.
SERIES B PREFERRED STOCK
As of the three months ended March 31, 2016 and 2015, there were 0 and 1,000,000 shares of Series B Preferred Stock issued and outstanding. Each holder of the Series B Shares will participate in any dividend payable to the holders of the common stock on an as-converted basis. The holders of the Series B Shares have voting rights equivalent to the number of shares of common stock into which the Series B Shares are convertible, or 19.8% (in the aggregate) of the Company’s common stock outstanding after the conversion, measured on the date of conversion. In the event of liquidation, following the sale or disposition of all or substantially all of the Company’s assets, holders of Series B Shares shall be entitled to receive $1.50 per preferred share. The Series B Shares are also redeemable at the rate of $1.50 per share. On November 18, 2013 the Company sold 500,000 shares of Series B Preferred Stock to 112359 Factor Fund, LLC (“Factor Fund”) for a total of $250,000. During the year ended December 31, 2014, Factor Fund purchased 500,000 additional shares of Series B Preferred Stock for $250,000. In February 2015, Factor Fund assigned its interest in the Series B Shares to its former members, FLUX Carbon Starter Fund LLC (“FCSF”) and Five Nine Group LLC (“59G”). FCSF and 59G later surrendered their respective interests in the Series B Shares on December 31, 2015 (see Note 9, Debt Obligations, above).
SERIES C PREFERRED STOCK
As of December 31, 2014 there were 999 shares of Series C Preferred Stock issued and outstanding. Holders of the Series C Shares will not participate in any dividend payable to the holders of the common stock, but have voting rights equivalent to the product obtained by dividing (a) the number of votes that the holders of all voting securities other than Series C Shares outstanding on the record date for the stockholder action are entitled to cast by (b) nine hundred ninety-eight (998), with the result that all 999 shares of Series C Shares together will have 50.1% of the voting power of the Company. In the event of liquidation, following the sale or disposition of all or substantially all of the Company’s assets, holders of Series B Shares shall be entitled to receive $0.01 per preferred share. The Series C Shares were deemed to have been automatically redeemed as of November 29, 2015, for no additional consideration.
SERIES E PREFERRED STOCK
On December 31, 2015, the Company filed with the Nevada Secretary of State a Certificate of Designation designating 520,000 shares of preferred stock as Series E Preferred Stock. Each outstanding share of Series E Preferred Stock will have a preference on liquidation of Ten Dollars ($10). The holder of a share of Series E Preferred Stock will have the right to convert the Ten Dollar value of the share into common stock at a conversion price equal to 85% of the average closing bid price for Bitzio common stock during the five trading days preceding conversion, except that no conversion is permitted that will result in the holder becoming the beneficial owner of more than 4.99% of Bitzio’s outstanding common stock. Holders of Series E Preferred Stock have no voting rights by reason of those shares, nor do they have any right to participate in any dividends paid by Bitzio. On December 31, 2015, the Company issued EXO Opportunity Fund LLC (“EXO”) 200,000 shares of Series E Preferred Stock in exchange for beneficial rights to 187,029 shares of GreenShift Series D Preferred Stock as part of the transactions related to the GreenShift merger. On December 31, 2015 the Company issued TCA Global Credit Master Fund, LP, for advisory fees, 320,000 shares of Series E Preferred Stock with a stated value at $3,200,000, for which the underlying conversion feature was valued as a derivative liability at a value greater than this amount of $3,435,737, with the excess treated as preferred dividends. The discount on this redeemable preferred stock of approximately $3.2 million will be amortized using the interest method through December 31, 2016, the earliest redemption date. In the event that TCA does not realize net proceeds from the sale of these Series E preferred shares or the common shares upon conversion of the preferred shares (the “Advisory Fee shares”) equal to the $3,200,000 fee value by the maturity date of the credit facility, these Advisory fee shares will become subject to mandatory redemption by TCA. 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 $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. 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. On December 31, 2015, the Company filed with the Nevada Secretary of State a Certificate of Designation designating 520,000 shares of preferred stock as Series E Preferred Stock. Each outstanding share of Series E Preferred Stock will have a preference on liquidation of Ten Dollars ($10). The holder of a share of Series E Preferred Stock will have the right to convert the Ten Dollar value of the share into common stock at a conversion price equal to 85% of the average closing bid price for Bitzio common stock during the five trading days preceding conversion, except that no conversion is permitted that will result in the holder becoming the beneficial owner of more than 4.99% of Bitzio’s outstanding common stock. Holders of Series E Preferred Stock have no voting rights by reason of those shares, nor do they have any right to participate in any dividends paid by Bitzio. On December 31, 2015, the Company issued EXO Opportunity Fund LLC (“EXO”) 200,000 shares of Series E Preferred Stock in exchange for beneficial rights to 187,029 shares of GreenShift Series D Preferred Stock. On December 31, 2015 the Company issued TCA Global Credit Master Fund, LP, 320,000 shares of Series E Preferred Stock with a stated value at $3,200,000, for which the underlying conversion feature was valued as a derivative liability at a value greater that this amount of $3,435,737 with the excess treated as preferred dividends. The discount on this redeemable preferred stock of approximately $3.2 million will be amortized through December 31, 2016, the earliest redemption date. A Preferred Dividend of $235,737 was immediately recognized at the time of the transaction. 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. The agreements with TCA provide TCA with the right to seek redemption of its Series E shares by the Company in the event of default. 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 fair value of the embedded conversion features of 320,000 shares of Series E Preferred Stock was determined using a Black-Scholes Simulation. This model requires the input of highly subjective assumptions, including the expected price volatility, which is based on the historical volatility of a peer group of publicly traded companies. Changes in the subjective input assumptions can materially affect the estimate of fair value of the warrants and the Company’s results of operations could be impacted.
The following assumptions were used in calculations of the Black Scholes model for the three months ended March 31, 2016 and 2015:
SERIES F PREFERRED STOCK
On December 31, 2015, the Company filed with the Nevada Secretary of State a Certificate of Designation designating 800,000 shares of preferred stock as Series F Preferred Stock. Each outstanding share of Series F Preferred Stock may be converted by the holder into shares of Bitzio common stock. The conversion ratio is such that the full 800,000 Series F shares convert into common shares representing 80% of the fully diluted common shares outstanding after the conversion (which includes all common shares outstanding plus all common shares potentially issuable upon the conversion of all derivative securities not held by the holder). The holder of Series F shares may cast the number of votes at a shareholders meeting or by written consent that equals the number of common shares into which the Series F shares are convertible on the record date for the shareholder action. In the event the Board of Directors declares a dividend payable to Bitzio common shareholders, the holders of Series F shares will receive the dividend that would be payable if the Series F shares were converted into Bitzio common shares prior to the dividend. In the event of a liquidation of Bitzio, the holders of 800,000 Series F shares will receive a preferential distribution equal to 80% of the net assets available for distribution to the shareholders.
COMMON STOCK
During the three months ended March 31, 2016, the Company issued 300,000,000 common shares for salaries. During the three months ended March 31, 2015, the Company issued 1,351,750,001 shares upon conversion of $114,106 in debt payable, and cancelled 157,500,000 shares for 175,500 shares of preferred stock series D. During the three months ended March 31, 2016 and 2015, an additional 625,000 and 19,375,000 shares common stock to be issued for services provided in amounts of $63 and $1,938, respectively, were included in additional paid in capital in the financial statements. During the three months ended March 31, 2016 and 2015, the Company agreed to issue a third party 1,800,000 and 1,800,000 shares of common stock for service rendered in amount of $9,000 and $9,000 and accrued 4,375,000 and 51,875,000 shares of common stock based on employment agreement in amount of $313 and $22,875 As of March 31, 2016 and December 31, 2015, the Company recorded common stock to be issued of $183,251 and $204,188, representing 30,220,812 and 327,795,812 shares of common stock issuable for services, which is included in additional paid in capital. |
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