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Note 12 - Commitments and Contingencies | 9 Months Ended
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Sep. 30, 2022
Notes to Financial Statements |
Commitments Disclosure [Text Block] |
12. | COMMITMENTS
Sales Incentive Agreement with TTI On March 25, 2020, the Company entered into a sales incentive agreement with TTI. Terms of the agreement include the following:
1. | The original term of the agreement was one year unless notice to terminate (as defined) was given. The agreement is automatically extended for additional one-year terms unless terminated.
2. | For each $5,000,000 in revenue (up to a maximum of $20,000,000) TTI generates during the first year that generates net income of at least 20% (as defined), the Company will pay TTI a sales incentive fee of $500,000 payable by the issuance of 62,500 shares of common stock.
3. | In the event that TTI generates revenue in excess of $20,000,000 during the first year, the Company will issue TTI a five-year warrant to purchase 12,500 shares of Common Stock at an exercise price of $12.00 per share for each $1,000,000 of revenue in excess of $20,000,000 (up to a maximum of $25,000,000).
In no event will the Company be obligated to issue more than 250,000 shares of common stock or warrants to purchase more than 62,500 shares of common stock pursuant to this agreement. There has been no revenue generated from this agreement. Distribution Agreement Swivel Secure has a distribution agreement with Swivel Secure Limited (“SSL”). Terms of the agreement include the following:
1. | The initial term of the agreement ends on January 31, 2027 and will be automatically extended for additional one-year terms thereafter unless either party provides written notice to the other party not later than 30 days before the end of the term that it does not wish to extend the term.
2. | SSL appoints Swivel Secure as the exclusive distributor of SSL’s products, to market, sell and distribute in the EMEA (Europe, Middle East and Africa), excluding the United Kingdom and Republic of Ireland, for a defined discount on the sale price.
3. | Swivel Secure is expected to generate a certain minimum level of orders of SSL products each year during the term of the agreement. If the Company fails to meet such minimum level of orders in any year, the exclusive distribution rights will terminate and the Company will serve as a non-exclusive distributer of SSL Products.
The Company expects the revenue targets to continue to be agreed to, based on historical negotiations and increasing distribution by Swivel Secure. Litigation From time to time, the Company may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of September 30, 2022, the Company was not a party to any pending lawsuits.

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- Definition The entire disclosure for significant arrangements with third parties, which includes operating lease arrangements and arrangements in which the entity has agreed to expend funds to procure goods or services, or has agreed to commit resources to supply goods or services, and operating lease arrangements. Descriptions may include identification of the specific goods and services, period of time covered, minimum quantities and amounts, and cancellation rights. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 440 -URI https://asc.fasb.org/topic&trid=2144648 + Details
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