8% CONVERTIBLE NOTES
|9 Months Ended|
Jun. 30, 2016
|Debt Disclosure [Abstract]|
|8% CONVERTIBLE NOTES||
Beginning March 11, 2015 and through March 13, 2015, the Company entered into a series of substantially similar subscription agreements (each a “Subscription Agreement”) with each of Anson Investments Master Fund, Ltd., Equitec Specialists, LLC and Capital Ventures International (collectively, the “Note Investors”) pursuant to which the Company issued unsecured 8% Convertible Notes (the “Notes”, and such transaction, the “Notes Offering”) to the Note Investors in the aggregate principal amount of $750,000. On the closing of the Notes Offering on March 13, 2015 (the “Closing Date”), each Note Investor was issued a Note in the principal amount of $250,000. The Company did not engage any underwriter or placement agent in connection with the Notes Offering.
During the three months ended June 30, 2016, $100,000 in principal outstanding under the Notes and $8,622 of accrued interest were converted into 543,111 shares of the Company’s Common Stock. During the nine months ended June 30, 2016, $605,000 in principal outstanding under the Notes and $39,900 of accrued interest were converted into 3,224,494 shares of the Company’s Common Stock. As of June 30, 2016 and September 30, 2015, principal amounts outstanding under the Notes amounted to $0 and $605,000, respectively.
The Company accounted for the conversion feature embedded within the Notes in accordance with ASC 815-10, Derivatives and Hedging. Because the options to convert into Common Stock are not indexed to the Company’s stock and are not classified within stockholders’ equity, the options to convert are recorded as liabilities at fair value. They are marked to fair value each reporting period through the consolidated statement of operations.
On the Closing Date, the derivative liability was recorded at fair value of $354,988 with the remaining proceeds of $395,012 allocated to the Notes. The allocation of funds to the derivative liability resulted in a discount on the Notes, which was accreted to interest expense over the life of the loan. For the three and nine months ended June 30, 2016, $29,101 and $131,252, respectively of the loan discount has been accreted to interest expense. As of June 30, 2016 the accreted balance of the outstanding Notes was $0.
As a result of the conversion of notes we recorded other income of $0 and $142,964 for the three and nine months ended June 30, 2016, respectively, and due to the change in the estimated fair value of the derivative liability we recorded other income of $0 and $192,128 for the three and nine months ended June 30, 2016, respectively.
Fair Value Measurements Using Significant Unobservable
The derivative liability was valued as of September 30, 2015, October 29, 2015 (weighted average conversion date) and December 31, 2015 using Monte Carlo Simulations with the following assumptions:
The entire disclosure for information about short-term and long-term convertible 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.
No definition available.