Convertible Notes and Derivative Liabilities
|12 Months Ended|
Dec. 31, 2019
|Debt Disclosure [Abstract]|
|Convertible Notes and Derivative Liabilities||
NOTE 8 - CONVERTIBLE NOTES AND DERIVATIVE LIABILITIES
On March 29, 2019, the Company completed a bridge financing, pursuant to which the Company issued to two accredited investors convertible notes on the aggregate principal amount of $225 (the “Notes”) and seven-year warrants (the “March Warrants”) to purchase an aggregate of 90,000 shares of the Company’s common stock or Series C Preferred Stock. These warrants were initially accounted for as a derivative liability.
Between April and May 2019, the Company completed multiple bridge financings, pursuant to which the Company issued to two accredited investors convertible notes in the aggregate principal amount of $250 and seven-year warrants to purchase an aggregate of 100,000 shares of the Company’s common stock or Series C Preferred Stock with the same terms as the notes issued on March 29, 2019.
In June 2019, the Company paid off all convertible notes and interest with funds raised from an equity financing of $2,000, or Qualified Financing. The balance of the notes and interest paid off was $475 and $5, respectively. As a result, a loss of $288 was recorded on extinguishment of derivative liabilities upon payoff of convertible notes.
On March 29, 2019 the Company issued 90,000 warrants in conjunction with the issuance of convertible debt.
Between April and May 2019, the Company issued 100,000 warrants in conjunction with the issuance of convertible debt.
These warrants were initially accounted for as a derivative liability.
A summary of quantitative information with respect to valuation methodology and significant unobservable inputs used for the Company’s purchase warrants that were categorized within Level 3 of the fair value hierarchy during the year ended December 31, 2019 is as follows:
The foregoing assumptions were reviewed quarterly and were subject to change based primarily on management’s assessment of the probability of the events described occurring.
As of June 26, 2019, the Company completed a Qualified Financing, at which point the warrants exercise price is fixed and the warrants no longer require derivative treatment. The warrants were remeasured at fair value on that date and the remaining derivative liability of $196 reclassed to equity.
Financial Liabilities Measured at Fair Value on a Recurring Basis
The fair value accounting standards define fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is determined based upon assumptions that market participants would use in pricing an asset or liability. Fair value measurements are rated on a three-tier hierarchy as follows:
There were no transfers between Level 3 during the year ended December 31, 2019.
The following table presents changes in Level 3 liabilities measured at fair value for the year ended December 31, 2019:
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://fasb.org/us-gaap/role/ref/legacyRef