Stockholders' Equity |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 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 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. During six months ended June 30, 2016, the Company recognized $117,724 in preferred dividends for accretion of the discount on this redeemable preferred stock. 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.
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 six months ended June 30, 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 six months ended June 30, 2016, the Company issued 300,000,000 common shares for salaries, and 100,000,000 shares for settlement of debt obligation. (see Note 9, Debt Obligations). During the six months ended June 30, 2015 the Company issued 2,351,750,001 shares in conversion of notes payable of $652,973, and 638,833,333 shares for accrued salaries. During the six months ended June 30, 2016 and 2015, an additional 1,250,000 and 1,250,000 shares common stock to be issued for services provided in amounts of $125 and $125, 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 3,600,000 and 3,600,000 shares of common stock for service rendered in amount of $18,000 and $18,000 and accrued 0 and 400,000,000 shares of common stock based on conversion notice amount of $0 and $40,000.As of June 30, 2016 and December 31, 2015, the Company recorded common stock to be issued of $192,313 and $204,188, representing 30,645,812 and 327,795,812 shares of common stock issuable for services, which is included in additional paid in capital. |
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