[iddyrashy]

Folks,

I have voodoo accounting question.

I am an accounting manager for a venture capital funded tech company, like you all knows venture people are notorious for creepy transactions. lets cut the chase below is my dilemma.

On Sept. 2014 investors loan the company 4.5M bridge loan, which is convertible debt, to be converted to common upon qualifying event.

Here is the exactly verbiage: All of the Notes shall automatically convert upon the Stock Closing into Common Stock. On conversion, an amount equal to 3 x all outstanding indebtedness due under the Notes (including all accrued and unpaid interest thereon) will convert into Common Stock at a conversion price equal to $1.53.

Now there is a kicker of 3x, my questions is how do i treat this transaction upon conversion. Do I convert only 4.5M, or do i convert 13.5M to reflect that 3x? ASC 470-20-25-5 provide some guideline, but not that deep.

Thanks for the help.

AUD 89 (07/06/14)
REG 83 (08/27/2015)
FAR 78 (04/27/2015)
BEC 75 (11/13/2015)

TEXAS 2016

[JohnWayneIsGod]

Hm. Almost sounds like you need to estimate how much debt would be outstanding when the stock conversion occurs.

FAR - 80

Courage is being scared to death, but saddling up anyway.

-John Wayne

[Author]

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