CONVERTIBLE NOTES

3 Months Ended

Mar. 31, 2018

NOTE 4 – CONVERTIBLE NOTES

All of our outstanding convertible notes are accounted for using the guidance set forth in the FASB Accounting Standards Codification (ASC) 815 which requires that the Company determine whether the embedded conversion option must be separated and accounted for separately. ASC 470-20, regarding debt with conversion and other options, requires the issuer of a convertible debt instrument that may be settled in cash upon conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer’s nonconvertible debt borrowing rate.

The Company accounts for the 2013 Notes as a liability, on an aggregated basis, in their entirety. The 2016 Notes were accounted for partially as liability and equity components of the instrument and partially as a debt host contract with an embedded derivative resulting from the conversion feature. During the year ended December 31, 2017, the embedded derivative was reclassified to additional paid in capital.

Issuance costs regarding the issuance of the 2016 Notes are amortized using the effective interest rate.

The debt discount and debt issuance costs regarding the issuance of the 2013 Notes are deferred and amortized over the 2013 Notes period (5 years).

During the three months ended March 31, 2018, note holders converted $1.0 million aggregate principal amount of the 2016 Notes into a total of 1,338,707 shares of Common Stock, and cash payments of approximately $11,668, in the aggregate.

As of March 31, 2018, a total of $58.1 million aggregate principal amount of the 2016 Notes and $5.9 million aggregate principal amount of the 2013 Notes were outstanding.