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Topic: Convertible Notes and Equity Question (

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STHarlow
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Joined: 14 May 2012
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Posts: 2

Posted: 14 May 2012 at 15:32 \| IP Logged

Hi, I'm facing a pretty unique situation financing my
company. I need to get some investment capital into the
company to increase our networth, but for tax reasons
it's dangerous for us to increase the valuation of our
company right now (because the founder's may be taxed on
the new valuation and not the founding value). My
question is this:

Is there ever a way for a convertible note to be
accounted for as just equity, and not also a liability?
Perhaps if a no-call clause was written into it, and it
was automatically forced to convert to equity at the date
of maturity (1 year)? The reason we're using a
convertible note is to avoid setting a valuation on the
company.

Thanks!

Steve

STHarlow
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Joined: 14 May 2012
Online Status: Offline
Posts: 2

Posted: 14 May 2012 at 15:33 \| IP Logged

Oh, and I forgot to mention. We need to adhere to GAAP
standards obviously.

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