Note 3 - Notes Receivable

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Financing Receivables [Text Block]

3.

         NOTES RECEIVABLE

During the quarter ended

September 30, 2017,

we entered into a Loan Agreement with a privately-held identity and professional services company with ties to the FinTech industry. We committed to lend up to

$1,500,000

all of which has been advanced as of

December 31, 2019.

During

2018

and

2019,

we advanced

$1,050,000

on

four

separate simple Promissory Notes. During

2019,

as discussed in Note

4,

we converted the Loan Agreement and all outstanding Promissory Notes to an equity ownership of

40

percent of the company. At the same time, we entered into and advanced a

$1,000,000

Loan Agreement that bears interest at the rate of

6.0

percent annually with a maturity date of

June 2021.

We expect to defer payment of the

June 2021

Loan and have therefore classified the Loan as long-term. In

October 2019

and

January 2020,

we entered into Loan Agreements and advanced an additional

$500,000

and

$1,000,000,

respectively, that bear interest at the rate of

6.0

percent annually with a maturity date of

October 2021

and

January 2022,

respectively. A portion of the company's business has been negatively impacted by the pandemic while other portions of its business have improved. We evaluate the carrying values of our notes receivable on a continuing basis to determine whether there are any indications that the carrying amount of the note receivable

may

not

be recoverable. We have

not

recorded any impairments related to this investment as of

September 30, 2020,

however, significant variations from current expectations could impact future assessments resulting in future impairment charges.

In the quarter ended

March 31, 2018,

we entered into a Convertible Loan Agreement with a private limited India based company in the FinTech industry. We committed to lend up to

$435,000

with an initial advance of

$235,000.

The loan bears interest at the rate of

5.0

percent annually with the maturity date on the

third

anniversary of funding of such Promissory Note. We are entitled to convert the principal on the initial Note for up to

ten

percent ownership of shares of the company. Due to the economic downturn resulting from the Indian government's response to COVID-

19

and the impact of the economic downturn on the private limited India based company, we have determined that the principal and interest is likely

not

collectible and therefore recorded a valuation allowance for the quarter ended

March 31, 2020

of

$259,000,

included in investment loss on the Consolidated Statement of Operations.