Annual report pursuant to Section 13 and 15(d)

Safe Agreements

Safe Agreements
12 Months Ended
Dec. 31, 2020
Safe Agreements Disclosure [Abstract]  
SAFE Agreements

Note 7. SAFE Agreements

In December 2018, the Company entered into Simple Agreement for Future Equity (SAFE) agreements (the “SAFE Financing”) with five investors pursuant to which the Company received funding of $535,000 in exchange for agreement to issue the investors shares of preferred stock upon occurrence of a subsequent financing of preferred stock.

The number of shares to be received by the SAFE agreement investors was based on 80% of the pricing in the triggering equity financing. In a liquidity or dissolution event, the investors’ right to receive cash out was junior to payment of outstanding indebtedness and creditor claims, on par for other SAFEs and preferred stock, and senior to common stock. The SAFE agreements had no interest rate or maturity date, and the SAFE investors had no voting right prior to conversion.

As of December 31, 2018, the Company had received $535,000 of proceeds related to the SAFE agreements. The SAFE agreements had not yet converted as a qualifying financing had not yet occurred as of December 31, 2018. Pursuant to the guidance under ASC 480, the Company determined that the Purchase Amount (a term defined in the SAFE agreements denoting the amount in exchange for which an investor received the rights to receive the shares) should be recorded as a liability on the Company’s balance sheet. Due to a short period where the Company expected these to be converted, the Company recorded the entire amount of $535,000 as a short-term liability. The SAFE agreements were converted to equity in March 2019 and the Company issued 213,510 shares of Series A Preferred Stock in full satisfaction of these agreements.