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Debt | 12 Months Ended
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Dec. 31, 2019
Debt Disclosure [Abstract] |
Debt | Debt EB-5 Loan In September 2016, pursuant to the U.S. government’s Immigrant Investor Program, commonly known as the EB-5 program (the “EB-5 Program”), the Company entered into an arrangement (the “EB-5 Loan Agreement”) to borrow up to $10.0 million from EB5 Life Sciences, L.P. (the “Lender”) in $0.5 million increments. Borrowing may be limited by the amount of funds raised by the Lender and are subject to certain job creation requirements by the Company. Borrowings are at a fixed interest rate of 4.0% per annum and are to be utilized in the clinical development, manufacturing, and commercialization of the Company’s products and for the general working capital needs of the Company. Outstanding borrowings pursuant to the EB-5 Program, including accrued interest, become due upon the seventh anniversary of the final disbursement. Amounts repaid cannot be re-borrowed. The EB-5 note is secured by substantially all assets of the Company, except for any patents, patent applications, pending patents, patent license, patent sublicense, trademarks, and other intellectual property rights. In 2016, $1.0 million was borrowed by the Company. Issuance costs for these borrowings totaled $0.1 million, which was recognized as a reduction to the loan balance and is amortized to interest expense over the term of the loan. See Note 12 for information regarding events subsequent to December 31, 2019.
| As of December 31, |  |
| 2019 |  | 2018
Principal outstanding | $ | 1,000,000 |  |  | $ | 1,000,000 |
Plus: accrued interest | 127,777 |  |  | 87,222 |
Less: unamortized debt issuance costs | (55,654) |  |  | (70,495) |
Carrying value of debt | $ | 1,072,123 |  |  | $ | 1,016,727 |
Convertible Notes During the years ended December 31, 2019 and 2018, the Company issued convertible notes (the “Notes”) to new and existing stockholders in the Company, including Notes in the aggregate principal amount of $3.5 million to members of the Board of Directors. As of December 31, 2019, all Notes had been converted and were no longer outstanding. At issuance, the following amounts were recorded:
Note Issuance Date | Note Principal Amount |  | Fair Value of Embedded Derivatives |  | Debt Issuance Costs |  | Carrying Value upon Issuance
January 2018 | $ | 5,000,000 |  |  | $ | (2,657,711) |  |  | $ | (35,969) |  |  | $ | 2,306,320 |
June 2018 | 1,000,000 |  |  | (724,216) |  |  | (3,000) |  |  | 272,784 |
November 2018 | 1,150,400 |  |  | (21,127) |  |  | (50,646) |  |  | 1,078,627 |
December 2018 | 150,000 |  |  | (2,857) |  |  | (14,310) |  |  | 132,833 |
January 2019 | 450,000 |  |  | (182,882) |  |  | (29,358) |  |  | 237,760 |
February 2019 | 1,000,000 |  |  | (302,379) |  |  | (55,875) |  |  | 641,746 |
Total | $ | 8,750,400 |  |  | $ | (3,891,172) |  |  | $ | (189,158) |  |  | $ | 4,670,070 |
All Notes accrued interest at a rate of 5% per annum and had scheduled maturity dates on the eighteen month anniversary of the date of the issuance of the Notes (the “Maturity Date”). If prior to the Maturity Date, there was a consummation of the sale of all or substantially all of the assets of the Company, change in control or event of default, the Notes would become due and payable at an amount equal to 1.5 times the principal amount of the Notes together with all accrued interest (the “Change in Control Feature”). If the Company received equity financing from the issuance of stock of the Company from an investor or group of investors in a transaction or series of related transactions above a certain amount of gross proceeds, the principal amount and all interest accrued but not paid through the closing date of the qualified equity financing was to automatically convert into the same class of equity securities as those issued in the qualified equity financing ("conversion feature"). The price per share varied among the Notes ranging from a 0% to 30% discount to the lowest price per share being paid by investors in the qualified equity financing. The Company bifurcated the Conversion Feature for the January 2018, June 2018, January 2019, and February 2019 notes and classified it as a derivative liability because the Conversion Feature does not have a fixed conversion price and conversion will be settled in a variable number of shares of common stock. There was no bifurcated Conversion Feature for the November 2018 and December 2018 notes as there is no discount to the lowest equity price triggering conversion. The Company also bifurcated the Change in Control Feature for all of the Notes because it was determined to be a redemption feature not clearly and closely related to the debt host. The fair value of both of the embedded features was accounted for as a derivative liability and was recorded as a discount on the Notes. Inputs used in valuation were unobservable and therefore considered Level 3 in the fair value hierarchy. The debt discount is accreted into interest expense over the expected time until conversion of the Notes. The accretion amounted to $0.6 million and $3.4 million, for the year ended December 31, 2019 and 2018, respectively. The fair value of the embedded features was classified as a liability in the Company’s consolidated balance sheets at issuance, with subsequent changes in fair value during the year ended December 31, 2019 and 2018 recorded on the Company’s consolidated statements of operations and comprehensive loss as a change in fair value of derivative liabilities.
|  | Amount
Balance at January 1, 2018 |  | $ | — |
Fair value of embedded derivatives at issuance |  | 3,405,911 |
Change in fair value of embedded derivatives |  | (1,664,689) |
Balance at December 31, 2018 |  | $ | 1,741,222 |
Fair value of embedded derivatives at issuance |  | 567,661 |
Change in fair value of embedded derivatives |  | 1,319,400 |
Conversion and extinguishment of debt |  | (3,628,283) |
Balance at December 31, 2019 |  | $ | — |
The Company considered several possible outcomes in the likelihood and timing of a qualified equity financing and/or a change in control occurring that would trigger conversion or redemption and believes the amounts disclosed above based on inputs utilized in the valuation were the best estimates at each valuation date. On April 5, 2019, Former Ocugen entered into a Stock Subscription Agreement (“Subscription Agreement”) with existing investors for the sale of 0.1 million shares of common stock for $1.0 million, or $12.41 per share including the sale of 40,286 shares of common stock for $0.5 million to a member of the Board of Directors. This capital raise triggered the conversion features on the convertible debt described above. The Notes were modified to change the discount percentage from the 0% discount per the terms of the November 2018 and December 2018 Notes and the 15% discount per the terms of the January 2019 and February 2019 Notes to 30% at the time of conversion. The Company issued 1.1 million shares of common stock at $8.69 per share on the date of conversion to extinguish the debt, which resulted in a loss of $0.3 million. This non-cash conversion also resulted in an increase of $13.0 million in additional paid-in capital, which was based on the principal balance outstanding and the unpaid interest upon conversion. Convertible Promissory Notes On April 4, 2019, the Company issued the convertible promissory note (the “Promissory Note”) to an existing stockholder for $0.9 million at an interest rate of 5% per annum. On May 16, 2019, the Promissory Note was converted into equity. Former Ocugen issued 0.1 million shares of common stock at the conversion date to extinguish the debt at $12.41 per share. This non-cash transaction resulted in an increase of $0.9 million in additional paid-in capital, which was based on the principal balance outstanding and the unpaid interest upon conversion. Senior Secured Convertible Notes On May 21, 2019, the Company issued senior secured convertible notes to certain investors for $2.4 million at an original issue discount of $0.5 million, and on June 28, 2019, the Company entered into an agreement to issue additional senior secured convertible notes to the investors for $2.9 million with an original issue discount of $0.4 million (together “Senior Secured Notes”). Immediately prior to the Merger completed on September 27, 2019, the investors offset $5.3 million from the amount to be received under the Pre-Merger Financing and the Senior Secured Notes were deemed to have been repaid and cancelled. The accretion of the original issue discount to interest expense amounted to $0.8 million during the year ended December 31, 2019.

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- Definition The entire disclosure for information about short-term and long-term 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, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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