General form of registration statement for all companies including face-amount certificate companies

Note 11 - Change of Accounting Method

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Note 11 - Change of Accounting Method
12 Months Ended
Dec. 31, 2018
Note 11 - Change Of Accounting Method  
Change of Accounting Method

Adoption of ASU 2017-11

 

In connection with the securities purchase agreements and debt transactions during the year ended December 31, 2017, the Company issued warrants to purchase common stock with a five-year term. Upon issuance of the warrants, the Company evaluated the note agreement to determine if the agreement contained any embedded components that would qualify the agreement as a derivative. The Company identified certain put features embedded in the warrants that potentially could result in a net cash settlement in the event of a fundamental transaction, requiring the Company to classify the warrants as a derivative liability. The Company changed its method of accounting for the debt and warrants through the early adoption of ASU 2017-11 on January 1, 2018 on a retrospective basis. Accordingly, the Company recorded the warrant derivative and conversion option derivative liabilities to additional paid in capital upon issuance.

 

The following table provides a summary of the derivative liability activity as a result of the adoption of ASU 2017-11 (in thousands, except per share data):

 

    Consolidated Balance Sheet  
    December 31, 2017  
    Previously Reported     Revisions     Revised Report  
Additional Paid-in Capital   $ 519,702,000     $ 1,603,000     $ 521,305,000  
Accumulated Deficit   $ (267,896,000 )   $ (1,603,000 )   $ (269,499,000 )

 

    Consolidated Statement of Operations  
    For the Year Ended December 31, 2017  
    Previously Reported     Revisions     Revised Report  
Change in Warrant Liability   $ 925,000     $ (925,000 )   $ -  
Earnings per Share   $ (8.54 )   $ (0.06 )   $ (8.60 )

 

During 2018, the down round provisions of certain of the notes was triggered. The Company calculated the value of the down round feature on that date and determined there to be no additional cost to be reported.