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The ASC Master Glossary provides the following definition of a down round feature.

Definition from ASC Master Glossary

Down round feature: A feature in a financial instrument that reduces the strike price of an issued financial instrument if the issuer sells shares of its stock for an amount less than the currently stated strike price of the issued financial instrument or issues an equity-linked financial instrument with a strike price below the currently stated strike price of the issued financial instrument.
A down round feature may reduce the strike price of a financial instrument to the current issuance price, or the reduction may be limited by a floor or on the basis of a formula that results in a price that is at a discount to the original exercise price but above the new issuance price of the shares, or may reduce the strike price to below the current issuance price. A standard antidilution provision is not considered a down round feature.

Down round features are most often found in warrants and conversion options embedded in debt or preferred equity instruments issued by private reporting entities, but may also be found in financial instruments issued by public reporting entities. These features reduce the strike price of the instrument when an issuer sells shares of its stock (or issues equity-linked instruments) for amounts less than the current strike price (or with a strike price less than the current strike price).
When a down round feature is triggered (i.e., when the strike price is reduced) on an equity-classified freestanding financial instrument (e.g., a warrant), reporting entities that present earnings per share must recognize the value of the effect of the down round feature as a deemed dividend. This value reduces the income available to common stockholders in the computation of basic earnings per share.
The value of the effect of the down round is calculated as the difference between (1) the fair value of the financial instrument (without the down round feature) with a strike price corresponding to the stated strike price of the issued instrument (that is, before the strike price reduction), and (2) the fair value of the financial instrument (without the down round feature) with a strike price corresponding to the reduced strike price. These fair values are determined as of the date the down round feature is triggered.
When a down round feature on an embedded conversion option (that is not separately accounted for) is triggered, the accounting guidance on contingent beneficial conversion features in ASC 470-20-25-20 must be considered.
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