Annual report pursuant to Section 13 and 15(d)

16. Equity Transactions

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16. Equity Transactions
12 Months Ended
Dec. 31, 2015
Pro forma financial information  
16. Equity Transactions

Common Stock

 

Fusion is authorized to issue 50,000,000 shares of its common stock. As of December 31, 2015 and December 31, 2014, 12,788,971 and 7,345,028 shares of Fusion’s common stock, respectively, were issued and outstanding.

 

On December 8, 2015, the Company sold approximately 2.6 million shares of Fusion’s common stock for aggregate proceeds of approximately $5.6 million. In addition, during 2015, 137,615 shares of Fusion’s common stock was issued to Marvin Rosen as payment of $0.3 million of outstanding notes payable (see note 15) and 11,468 share of common stock was issued to Matthew Rosen our CEO, representing $25,000 as partial payment of his cash bonus.

 

On August 28, 2015, in connection with the Third Amendment, Fusion issued 728,333 shares of its common stock to the original lenders (Praesidian Capital, United Insurance and Plexus Fund) under the original credit agreement upon their cashless exercise of lenders’ warrants.

 

During the three months ended December 31, 2015, Fusion issued 8,833 shares of its common stock to third party consultants at a price of $3.36 per share of common stock, and through the fiscal year ended December 31, 2015, Fusion has issued an aggregate of 67,000 shares of common stock to third party consultants for services rendered valued at $245,290.  During the year ended December 31, 2014, the Company issued an aggregate of 38,491 shares of Fusion common stock to third parties for services valued at $163,842.

 

For the year ended December 31, 2015, Fusion’s Board of Directors declared aggregate dividends of $1.2 million related to Fusion’s Series B-2 Preferred Stock, which, as permitted by the terms of the Series B-2 Preferred Stock, was paid in the form of 434,201 shares of Fusion’s common stock. During 2015, certain holders of Series B-2 Preferred Stock elected to convert 3,469 shares of their Series B-2 Preferred Stock into an aggregate of 782,550 shares of Fusion’s common stock at an average conversion price of $4.43 per share.

 

During the year ended December 31, 2014, Fusion’s Board of Directors declared aggregate dividends of $1.3 million related to Fusion’s Series B-2 Preferred Stock, which, as permitted by the terms of the Series B-2 Preferred Stock, was paid in the form of 299,216 shares of Fusion’s common stock. During 2014, certain holders of Series B-2 preferred stock elected to convert 1,090 shares of their Series B-2 preferred stock into an aggregate of 218,000 shares of Fusion’s common stock at an average conversion price of $5.00 per share.

 

Preferred Stock

 

Fusion is authorized to issue up to 10,000,000 shares of preferred stock. At December 31, 2015 and 2014, there were 5,045 shares of Series A cumulative Preferred Stock issued and outstanding. In addition, as of December 31 2015 and 2014, there were 18,279 and 21,748 shares of Series B-2 Preferred Stock issued and outstanding, respectively.

 

The holders of the Series A Preferred Stock are entitled to receive cumulative dividends of 8% per annum payable in arrears, when and if declared by Fusion’s Board of Directors. As of December 31, 2015, no dividend had been declared by the Fusion Board of Directors with respect to the Series A Preferred Stock, and the Company had accumulated approximately $4.3 million of preferred stock dividends.   The holders of the shares of Series B-2 Preferred Stock are entitled to receive a cumulative 6% annual dividend payable quarterly in arrears when and if declared by the Fusion Board of Directors, in cash or shares of Fusion common stock, at the option of the Company.

 

Commencing January 1, 2016, Fusion has the right to force the conversion of the Series B-2 Preferred Stock into Fusion common stock at a conversion price of $5.00 per share; provided that the volume weighted average price for its common stock is at least $12.50 for ten consecutive trading days.

 

The following table summarizes the activity in the Company’s various classes of preferred stock for the years ended December 31, 2015 and 2014:

 

    Series A-1 Preferred Stock     Series A-2 Preferred Stock     Series A-4 Preferred Stock     Series B-2 Preferred Stock     Total  
    Shares           Shares           Shares           Shares           Shares        
Balance at December 31, 2013     2,375     $ 24       2,625     $ 26       45     $ -       18,480     $ 185       23,525     $ 235  
Issuance of shares for cash                                                     4,358       44       4,358       43.6  
Conversion of preferred stock into common stock                                                     (1,090 )     (11 )     (1,090 )     (11 )
Balance at December 31, 2014     2,375       24       2,625       26       45       -       21,748       218       26,793       268  
Conversion of preferred stock into common stock                                                     (3,469 )     (34 )     (3,469 )     (34 )
Balance at December 31, 2015     2,375     $ 24       2,625     $ 26       45     $ -       18,279     $ 184       23,324     $ 234  

 

Each share of Series B-2 Preferred Stock has a stated value of $1,000, and is convertible into shares of Fusion’s common stock at the option of the holder at a conversion price of $5.00 per share, subject to adjustment. At December 31, 2015, the Series B-2 Preferred Stock is convertible into an aggregate of 3,655,800 shares of Fusion’s common stock.

 

The holders of Series B-2 Preferred Stock have liquidation rights that are senior to those afforded to holders of the Company’s other equity securities, and are entitled to vote as one group with holders of common stock on all matters brought to a vote of holders of common stock (with each share of Series B-2 Preferred Stock being entitled to that number of votes into which the registered holder could have converted the Series B-2 Preferred Stock on the

record date for the meeting at which the vote will be cast).  Holders of common stock are also entitled to vote as a separate class on all matters adversely affecting (within the meaning of Delaware law) such class.

 

Warrants

 

In connection with various debt and equity financing transactions and other agreements, the Company has issued warrants to purchase shares of Fusion’s common stock.  All of the outstanding warrants are fully exercisable as of December 31, 2014. For the year ended December 31, 2015, the Company did not issue any warrants.

 

The following table summarizes the information relating to warrants issued and the activity during the years ended December 31, 2015 and 2014:

 

    Number of Warrants     Per Share Exercise Price     Weighted Average Exercise Price  
Outstanding at December 31, 2013     4,016,075     $0.50 to $83.50     $ 6.25  
Granted in 2014     402,997     $6.25     $ 6.25  
Expired in 2014     (253,964 )   $5.50 to $83.50     $ 21.18  
Exercised in 2014     -     -       -  
Outstanding at December 31, 2014     4,165,108     $0.50 to $10.50     $ 5.48  
Granted in 2015     -     -     $ -  
Expired in 2015     (425,015 )   $7.0 to $10.50     $ 9.30  
Exercised in 2015     (728,333 )   $0.50     $ 0.50  
Outstanding at December 31, 2015     3,011,760     $3.95 to $10.15     $ 6.14