Note 7 - Convertible Promissory Note

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Debt Disclosure [Text Block]

7. CONVERTIBLE PROMISSORY NOTE

July 2019 Note

On July 23, 2019, the Company entered into a private placement with the Accredited Investor, pursuant to which the Company issued and sold to such investor an unsecured convertible promissory note in the original principal amount of $1,000,000 (the “July 2019 Note”). The July 2019 Note is convertible into shares of the Company's common stock at a conversion price equal to the lower of (a) $1.80 per share or (b) 90% of the closing sale price of the Company’s common stock on the date of conversion (subject to a floor conversion price of $0.50). The July 2019 Note bears interest at the rate of twenty-four percent (24%) per annum and is payable quarterly in arrears. Unless sooner converted in the manner described below, all principal under the July 2019 Note, together with all accrued and unpaid interest thereupon, will be due and payable three years from the date of the issuance on July 31, 2022.

The following summarizes the July 2019 Note:

	Maturity Date	Stated Interest Rate			Conversion Price		Face Value		Remaining Debt Discount			Carrying Value
At December 31, 2021	7/31/2022		24	%	$	1.80	$	1,000,000	$	(187,000	)	$	813,000
At December 31, 2020	7/31/2022		24	%	$	1.80	$	1,000,000	$	(507,000	)	$	493,000

The Company recorded amortization expense for the debt discount on the July 2019 Note of $321,000 and $187,000 for the years ended December 31, 2021 and 2020, respectively. Interest expense related to the July 2019 Note was $240,000 for the years ended December 31, 2021 and 2020.