SOLI DD for you - buyer beware
All from filings
"There were no cash equivalents as of June 30, 2019 and December 31, 2018."
Convertible Notes - read carefully
"The Company commenced a private offering of convertible debt in the total principal amount of up to $3,000,000 in April 2019. The Company closed on a total of $1,680,000 in convertible notes, and the offering has been closed. As issued, the convertible notes bear interest at 6 percent per annum and may be converted at the election of the holder into common stock of the Company at a conversion price per share equal to 50 percent of the closing price of the stock at the time of a conversion election. No conversions are permitted during the first 6 months after issue. The notes mature on October 31, 2019.
Due to the conversion feature of the convertible notes, the Company evaluated the proper accounting and reporting treatment for the favorable conversion feature of the notes. After review of the accounting guidance, the Company concluded that the notes should be reflected as Share Settled Debt at fair value
Each of the convertible notes (the “Notes”) settles by providing the holder with a variable number of the Company’s shares with an aggregate fair value determined by reference to the debt principal outstanding. Because the value that
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the holder receives at settlement does not vary with the value of the Company’s 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 fair value. To illustrate the fact that the debt is settled with a variable number of shares for a fixed dollar amount: If the Company’s stock price is $2.00 at conversion date, the holder will convert at $1.00 (50% of market) per share and receive 1,680,000 shares, valued at $3,360,000. If the Company stock price is $5.00 at conversion date, the holder will convert at $2.50 (50% of market) per share and receive 672,000 shares, valued at the same $3,360,000.
The Convertible Notes total $1,680,000, and settle at a premium of $1,680,000 in common stock. The Company therefore recorded a Premium Liability of $1,680,000 in addition to the $1,680,000 in principal debt amount, with the Premium Liability reported as Other Interest Expense for the three months ended June 30, 2019."
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