A convertible note should be classified as a Long Term Liability that then converts to Equity as stipulated from the contract (usually a new fundraising round). I’ve attached a screenshot of what this looks like.
Assuming that there’s a $3,027,000 note with $181,620 in total accrued interest….
Conceptually, how the figures break out (not what you really what to present, but for presentation sake):
And in practice, showing that interest is accrued monthly and a “Net” Series A:
Hope this helps!!
**Note that SAFE notes are Equity right from the start
Want valuable startup information delivered straight to your inbox?
Your email has been added to the list.