Annual report pursuant to Section 13 and 15(d)

16. Equity Transactions

v3.6.0.2
16. Equity Transactions
12 Months Ended
Dec. 31, 2016
Pro forma financial information  
16. Equity Transactions

Common Stock

On October 28, 2016, Fusion’s Stockholders ratified an amendment to the Company’s Certificate of Incorporation to increase the number of authorized common shares to 90,000,000. As of December 31, 2016 and December 31, 2015, 20,642,028 and 12,788,971 shares of Fusion’s common stock, respectively, were issued and outstanding.

 

During the year ended December 31, 2016, 6,025 shares of Series B-2 Preferred Stock were converted into 1,205,000 shares of common stock. Also during the year ended December 31, 2016, the Fusion’s Board of Directors declared dividends of $2.0 million on outstanding shares of Series B-2 Preferred Stock, which were paid in the form of 1,140,568 shares of common stock as permitted by the terms of the Series B-2 Preferred Stock.

 

On November 16, 2016, Fusion sold an aggregate of 2,213,700 shares of common stock to 20 accredited investors in a private placement transaction, and received net proceeds of $2.3 million. In connections with this transaction, Mr. Rosen converted $250,000 of his outstanding notes into 217,391 shares of common stock.

 

During the year ended December 31, 2016, 51,380 shares of common stock previously issued to the sellers in a 2014 business acquisition were cancelled by mutual agreement between the Company and the sellers. Also during the year ended December 31, 2016, 55,000 shares of restricted common stock valued at $0.1 million were issued to one of Fusion’s executive officers and 74,167 shares of common stock valued at $0.1 million were issued to a third party for services rendered.

 

On November 14, 2016, Fusion issued to 2,997,926 shares of common stock as partial consideration in the Apptix acquisition transaction.

 

On December 8, 2015, the Company sold approximately 2.6 million shares of Fusion’s common stock for aggregate proceeds of $5.6 million. In addition, during 2015, 137,615 shares of Fusion’s common stock was issued to Marvin Rosen upon conversion of $0.3 million of his outstanding notes (see note 15) and $25,000 in annual bonus due to Matthew Rosen, the Company’s Chief Executive Officer, was paid through the issuance of 11,468 shares of common stock.

 

On August 28, 2015, in connection with the Third Amendment, Fusion issued 728,333 shares of its common stock to the original Praesidian Lenders 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.

 

For theyear 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.

 

Preferred Stock

Fusion is authorized to issue up to 10,000,000 shares of preferred stock. At December 31, 2016 and 2015, there were 5,045 shares of Series A cumulative Preferred Stock issued and outstanding. In addition, as of December 31 2016 and 2015, there were 12,254 and 18,279 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, 2016, no dividend had been declared by the Fusion Board of Directors with respect to any series of Series A Preferred Stock, and the Company had accumulated approximately $4.7 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, 2016 and 2015:

 

      Series A-1   Series A-2   Series A-4   Series B-2   Total    
      Shares   $   Shares   $   Shares   $   Shares   $   Shares   $  
Balance @ 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 @ December 31, 2015   2,375   24   2,625   26   45       18,279   184   23,324   234  
Conversion of preferred stock into common stock                         (6,025)    (60)   (6,025)    (60)  
Balance @ December 31, 2016   2,375   24   2,625   26      45    $   -        12,254    $ 124   17,299   174  
                                                         

 

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, 2016, the Series B-2 Preferred Stock is convertible into an aggregate of 2,450,800 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 Fusion’s common stock on all matters brought to a vote of such holders (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, 2016. For the years ended December 31, 2016 and 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, 2016 and 2015:

 

  Number of Warrants Per share Exercise Price Weighted Average Exercise Price
Outstanding at December 31, 2014 4,165,108 $0.50 to $10.50 5.48
Granted in 2015      
Exercised in 2015 (728,333) 0.50 0.50
Expired in 2015 (425,011) $7.00 to $10.50 9.30
Outstanding at December 31, 2015 3,011,764 $3.95 to $10.15 6.14
Granted in 2016      
Exercised in 2016      
Expired (105,198) $4.00-$7.00 5.00
Outstanding at December 31, 2016 2,906,566 4.25-$10.15 6.18