Convertible Notes Payable
|12 Months Ended|
Dec. 31, 2015
|Debt Disclosure [Abstract]|
|Convertible Notes Payable||
NOTE 5 CONVERTIBLE NOTES PAYABLE
In 2014, the Company issued a combination of convertible notes payable and a note payable for a total principal balance of $605,000 (the 2014 Notes) to two investors and converted all of these outstanding notes, plus accrued interest, into Series C preferred stock and warrants to purchase the Companys common stock. These notes were convertible upon a qualified equity financing, pursuant to which the Company sold, with the principal purpose of raising capital, a new class of preferred stock with an aggregate sales price of not less than $3,000,000, including the principal and accrued but unpaid interest of any notes which are converted into the preferred securities (Qualified Equity Financing), or upon a change of control.
The convertible notes payables with a principal balance of $535,000 settle by providing the holder with a variable number of the Companys shares with an aggregate fair value determined by reference to the debt principal outstanding. Because the value that the holder receives at settlement does not vary with the value of the Companys equity shares, the settlement provision is not considered a conversion option for financial accounting purposes. Rather, these notes are recognized as share-settled debt at amortized cost.
Details of the 2014 Notes are as follows:
As described in Note 7, all of the Companys outstanding debt was converted or exchanged for Series C preferred stock and warrants to purchase common stock in December 2014.
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://www.xbrl.org/2003/role/presentationRef