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Note V - Subsequent Events
 12 Months Ended
Dec. 31, 2019
Notes to Financial Statements  
Subsequent Events [Text Block]
NOTE V—SUBSEQUENT EVENTS
 
Refer to Note N for subsequent events related to convertible notes in effect as of
December 31, 2019.
 
On
January 13, 2020,
the Company issued a
$157,000
principal amount convertible note to an institutional investor with a maturity date of
June 13, 2020
which is convertible into common stock at a conversion price of
$1.50
per share. The note was redeemable at any time by payment of a premium to the principal balance starting at
10%
and increasing to
30%.
 At the closing, the Company agreed to issue
650,000
shares of common stock in lieu of payment of a
$75,000
commitment fee which would be reduced to
50,000
shares if the note is repaid prior to the maturity date.
 
On
February 13, 2020,
the Company issued a
$126,000
principal amount convertible note to an institutional investor with a maturity date of
July 13, 2020
which is convertible into common stock at a conversion price of
$1.15
per share. The note is redeemable at any time by payment of a premium to the principal balance starting at
10%
and increasing to
30%.
 At the closing, the Company agreed to issue
550,000
shares of common stock in lieu of payment of a
$57,500
commitment fee which would be reduced to
50,000
shares if the note is repaid prior to the maturity date.  To date, the Company has only issued
50,000
shares at the request of the lender.
 
On
March 25, 2020,
the Company entered into a sales incentive agreement TTI.  The agreement provides that for each
$5,000,000
in revenue (up to a maximum of
$20,000,000
) TTI generates for the Company during the
first
year, that generate net income (calculated under U.S. generally accepted accounting principles) of at least
20%,
the Company will pay TTI a sales incentive fee of
$500,000
payable by the issuance of
500,000
shares of Common Stock. In the event that TTI generates revenue for the Company in excess of
$20,000,000
during
first
year, the Company will issue TTI a
five
-year warrant to purchase
100,000
shares of Common Stock at an exercise price of
$1.50
per share (the “
Warrants
”) for each
$1,000,000
of revenue in excess of
$20,000,000
(up to a maximum of
$25,000,000
). In
no
event shall the Company be obligated to issue more than
2,000,000
shares of Common Stock or Warrants to purchase more than
500,000
shares of Common Stock pursuant to the Sales Agreement.
 
On
March 30, 2020,
972,000
warrant shares were exercised at
$1.50
for net proceeds to the Company of
$1,458,000.
 
On
April 2, 2020,
the Company issued
6,850
shares of common stock to its directors in payment of meeting fees.  Additionally, the Company issued a warrant to a new employee for
5,000
shares with
three
-vesting period. 
 
On
April 20, 2020,
the Company entered into a Paycheck Protection Program Term Note (the “SVB Note”) with Silicon Valley Bank (“SVB”) pursuant to the Paycheck Protection Program (the “Program”) of the recently enacted Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration. The Company received total proceeds of
$340,000
which will be used in accordance with the requirements of the CARES Act.  The Company will apply to SVB for forgiveness of amounts due on the SVB Note to the extent they are used for eligible payroll costs, rent obligations, and covered utility payments incurred during the
eight
weeks following disbursement under the SVB Note.   Until the
six
-month anniversary of the date of the SVB Note (the “Deferral Expiration Date”), neither principal nor interest is due and payable. On the Deferral Expiration Date, the outstanding principal of the SVB Note that is
not
forgiven will convert to an amortizing term loan at an interest rate of
1%
per annum requiring equal monthly payments of principal and interest through
November 20, 2022.
 
On
May 6, 2020,
the Company issued a
$2,415,000
principal amount senior secured convertible note (the “Note”) which provided for the funding of
$2,100,000.
The principal amount is due and payable in
five
equal monthly installments of
$268,333
beginning
seven
months after the funding date with the remaining balance due on the
twelfth
month after the date of funding. The Note is convertible at a fixed convertible price of
$1.16
per share. In connection with the issuance of the Note, the Company made a payment of a
$133,333
due diligence fee by issuing
114,943
shares to the Investor priced at
$1.16.
The Company also issued a warrant to purchase
1,900,000
shares of common stock at a fixed exercise price of
$1.16
and paid a placement fee of
7%
of the gross proceeds to Maxim Group LLC.
 
On
May 12, 2020,
the Company issued
7,077
shares of common stock to its directors in payment of meeting fees.
 
Subsequent to year-end, due to the effects of the worldwide coronavirus pandemic, the Company is closely monitoring its operations, liquidity, and capital resources. We are actively working to minimize the current and future impact of this unprecedented situation. As of the date of issuance of these financial statements, the full impact to the Company’s financial position is
not
known.
 
The Company has reviewed subsequent events through the date of this filing.