Bitech Technologies Corp - 10-K filing on 2015-03-31

NOTE 8. STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2014

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

NOTE 8. STOCKHOLDERS’ EQUITY

Common Stock

During the years ended December 31, 2014 and 2013, we issued common stock to compensate officers, employees, directors and outside professionals, to make an acquisition and to settle a lawsuit. The stock issuances were valued based on the quoted market price of our common stock on the respective measurement dates. Following is an analysis of common stock issuances during the years ended December 31, 2014 and 2013:

In September 2013, we issued an aggregate of 300,000 restricted shares of common stock, valued at $0.32 per share totaling $96,000, in connection with the engagement of a business development consultant. During the years ended December 31, 2014 and 2013, we recognized compensation expense of $64,000 and $18,667, respectively, related to the agreement. At December 31, 2014, unrecognized compensation expense was $13,333 which will be expensed in 2015.

On August 20, 2014, we entered into a Financing Agreement with Peter Dalrymple, our director, which provides for Mr. Dalrymple to assist us in obtaining financing in the form of a $2,000,000 revolving line of credit from a commercial lender, including providing a personal guaranty on the line of credit.

Under the terms of the financing agreement discussed in Note 7, we granted 800,000 unvested and restricted shares of common stock to Mr. Dalrymple. The stock vested as follows: (i) upon finalization of the line of credit with Wells Fargo on September 8, 2014, 100,000 shares vested, and (ii) thereafter, so long as the revolving line of credit remains in effect, 100,000 shares will vest at the end of each subsequent three-month period. Additionally, as consideration for agreeing to extend the promissory note and reduce the interest rate, we issued to Mr. Dalrymple 200,000 unvested and restricted shares of common stock, which stock also vested upon finalization of the line of credit with Wells Fargo on September 8, 2014. All shares are valued at $0.30 per share totaling $300,000.

All together we granted Mr. Dalrymple 1,000,000 shares of stock of which 400,000 shares were vested and issued during 2014. During the year ended December 31, 2014, we recognized compensation expense of $120,000 related to these share grants. At December 31, 2014, unrecognized compensation expense was $180,000 and will be recognized as expense as the shares vest through September 8, 2016.

In September 2014 we entered into an agreement with a consultant to assist us with the development of our Quad Video Halo. We granted him 400,000 unvested shares valued at $0.30 per share, totaling $120,000, with the shares to be vested and issued quarterly with 25,000 shares the first four quarters, 50,000 shares the following four quarters, and 25,000 shares the final four quarters ended September 2017. During the year ended December 31, 2014, we recognized compensation expense of $7,500 related to these share grants. At December 31, 2014, unrecognized compensation expense was $112,500 and will be recognized as the shares vest.

In December 2014, we issued an aggregate of 200,000 restricted shares of common stock, valued at $0.27 per share, totaling $53,000, which was recognized as compensation expense during 2014, in connection with the engagement of a business consultant.

Warrants

The following summarizes outstanding warrants and their respective exercise prices at December 31, 2014:

	Shares					Remaining
	Underlying		Exercise		Dates of	Contractual
Description	Warrants		Price		Expiration	Term (in years)
Warrants issued for loan extension		100,000	$	0.45	Jun 2015	0.5
Series D Warrants		200,000	$	1.00	Mar 2015	0.3
Secured Note Warrants		333,333	$	1.80	Aug2016	1.3
Convertible Note Warrants		69,445	$	0.43	Mar 2015	0.5

On June 27, 2012, we issued a $500,000 convertible promissory note bearing interest at 12% per year which originally matured on March 27, 2014. Interest only is due and payable quarterly with the principle balance and unpaid accrued interest due and payable on the maturity date in one lump sum payment. The holder of the note has the right to convert into common stock, at $1.50 per share, up to 100% of the principal amount. Under the original terms of the convertible note, the holder received a detachable warrant to purchase 69,445 shares of our common stock at the price of $1.80 per share that expired on June 27, 2014. This note was extended for one year on February 6, 2014 and now matures on March 27, 2015. As consideration for the extension, we issued an additional 69,445 warrants to purchase our common stock for $0.43 that expire on February 6, 2015. This note was paid in full on March 27, 2015.

The weighted-average estimated fair value of the 69,445 warrants issued, on February 6, 2014 was $0.19 per share using the Black-Sholes pricing model with the following assumptions:

Expected volatility		110	%
Risk-free interest rate		0.13	%
Expected life	1 year
Dividend yield		0	%

We currently have four series of outstanding warrants. Series B and Series C warrants were issued prior to 2013 with the debentures that have expired. During the year ended December 31, 2013, we issued 100,000 warrants in connection with the renewal of a third party note payable and debenture as described further in Note 7.

During 2012, as described in Note 7, we issued 333,333 warrants in conjunction with the secured note payable.

Interest expense related to Series D warrants issued in 2011 of $0 and $55,786 was recognized in the consolidated statements of operations for the years ended December 31, 2014 and 2013, respectively. The unamortized portion of the debt issuance cost asset is $0 at December 31, 2014.

A summary of the warrant activity for the years ended December 31, 2014 and 2013 follows:

						Weighted-
				Weighted-		Average	Aggregate
	Shares			Average		Remaining	Intrinsic
	Underlying			Exercise		Contractual	Value
Description	Warrants			Price		Term (in years)	(In-the-Money)


Outstanding and exerciseable at December 31, 2012		1,002,778		$	1.85	2.0

Warrants issued with long-tern Notes payable		100,000		$	0.45	1.0	$	45,000

Warrants expired (Series B and C)		(200,000	)

Outstanding and exerciseable at December 31, 2013		902,778		$	1.85	2.0

Warrants expired (Series D)		(200,000	)

Outstanding and exerciseable at December 31, 2014		702,778		$	1.25	0.8

Stock Options

We recognize compensation expense related to stock options in accordance with the Financial Accounting Standards Board (“FASB”) standard regarding share-based payments, and as such, have measured the share-based compensation expense for stock options granted during the years ended December 31, 2014 and 2013 based upon the estimated fair value of the award on the date of grant and recognizes the compensation expense over the award’s requisite service period. The weighted average fair values were calculated using the Black Scholes option pricing model.

Details of stock option activity for the years ended December 31, 2014 and 2013 follows:

						Weighted-
						Average	Aggregate
	Shares			Weighted		Remaining	Intrinsic
	Underlying			Average		Contractual	Value
Description	Options			Exercise Price		Term (Years)	(In-the-Money)

Outstanding at December 31, 2012		1,400,000		$	0.71	3.8	$	-
Options granted		-			-	-		-
Options forfeited		-			-	-		-

Outstanding at December 31, 2013		1,400,000			0.71	2.8		-
Options expired		(50,000	)
Options granted		-			-	-		-
Options forfeited		(50,000	)		-	-		-

Outstanding at December 31, 2014		1,300,000		$	0.71	1.8	$	-

The following summarizes outstanding stock options and their respective exercise prices at December 31, 2014:

	Shares				Remaining
	Underlying	Exercise		Dates of	Contractual
Description	Options	Price		Expiration	Term (in years)

Officers Options	600,000	$	0.77	Jun 2016	1.4
Directors Options	150,000	$	1.15	Jun 2015	0.5
Officers Options	550,000	$	0.54	Dec 2017	2.9

	1,300,000

For the year ended December 31, 2014, 50,000 director options expired and 50,000 employee options were forfeited due to resignation. No options were granted or forfeited for the year ended December 31, 2013. We recorded $171,110 and $288,000 in compensation expense in operating, general and administrative expenses in the accompanying consolidated statements of operations for the years ended December 31, 2014 and 2013, respectively. As of December 31, 2014, all unrecognized compensation expense related to non-vested stock option awards has been recognized.