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Subsequent Events
6 Months Ended
Jun. 30, 2020
Subsequent Events [Abstract]  
Subsequent Events

NOTE 9 – SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events through the date these financial statements were issued and has identified the following:

 

On July 27, 2020, the Company issued a secured convertible promissory Note in the principal amount of up to $1,500,000, to an accredited investor. The Company received $600,000 in aggregate gross proceeds. Any additional advances under this note would require the approval of the lender in its sole discretion. This note accrues interest at a rate of one and one-quarter percent (1.25%) per month and matures on January 24, 2021. Upon the closing of a Qualified Financing prior to repayment of this note, upon the written election by the investor, the outstanding principal and all accrued but unpaid interest thereon shall convert into fully paid and nonassessable shares of the preferred stock, par value $0.001 per share, of the Company issued and sold by the Company at the closing of a Qualified Financing. Upon such written election by the lender, this note shall convert into the number of shares of preferred stock (including fractional shares) equal to the quotient of (i) the outstanding principal and accrued but unpaid interest on this note, divided by (ii) the price per share paid by the cash purchasers of the preferred stock sold in such Qualified Financing. “Qualified Financing” means a transaction or series of transactions with the principal purpose of raising capital pursuant to which the Company issues and sells shares of preferred stock for aggregate gross proceeds of at least $2,500,000 (excluding all proceeds from the incurrence of indebtedness, including this note, that is converted into such preferred stock, or otherwise cancelled in consideration for the issuance of such preferred stock). As collateral security for the Company’s obligations under this note, the Company pledged, assigned and transferred to the investor a first priority security interest in and collateral assignment of the Company’s right, title and interest in and to all of the Company’s tangible and intangible property. This note contains customary events of default (each an “Event of Default”). If an Event of Default occurs, all outstanding obligations owing under this note will become immediately due and payable at the investor’s election.

 

During August 2020, the Company offered an inducement to all warrant holders of our $0.40 warrants for a total 2,634,228 common stock warrants outstanding by offering a $0.05 discount on the exercise price of these warrants if they immediately exercised. The adjusted exercise price of these warrants would become $0.35. To date, a vast majority of our warrant holders have exercised this discount, but the Company is still in the process of completing the inducement.