Note 8 - Line of Credit

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE 8. LINE OF CREDIT

December 2021 Credit Facility with Nantahala Capital Management

On December 29, 2021, the Company entered into a Term Loan and Security Agreement with certain funds and separate accounts managed by Nantahala Capital Management, LLC and other lenders (together with Nantahala, the “Lenders”), pursuant to which the Lenders will provide to the Company a secured term loan credit facility in an aggregate amount of up to $2,500,000.  Nantahala collectively owns, or otherwise controls, approximately 37.3% of our issued and outstanding voting securities.

On the Closing Date, the Company received in initial draw-down on the Credit Facility of $600,000.  Subsequent to the initial draw-down and through May 20, 2022, the Company received additional draw-downs aggregating $1,450,000. The Company expects to use the proceeds from the Credit Facility for working capital requirements and corporate purposes. As of May 20, 2022, there is approximately $342,000 outstanding under the Credit Facility in such Lender’s discretion, and no assurances can be given that the Lenders will consent to the release of the additional $342,000 under the LOC.  The Company is currently negotiating to obtain the remaining funds available under the Credit Facility, including obtaining a waiver of the minimum cash requirement covenant under the Credit Facility.  In this regard, the Company is required to maintain a minimum amount of unrestricted cash and cash equivalents and may fall below the minimum cash requirement given its existing cash balances.  Although we believe we will obtain a waiver of the minimum cash requirement, in the event the Company is unable to obtain a waiver of the minimum cash requirement, the Lenders fail to provide the remaining funds under the Credit Facility, and/or we fail to obtain alternative sources of capital, of which no assurances can be given, such inability may result in an event of default under the terms of the Credit Facility, thereby providing the Lenders with certain rights and remedies under the terms of the Credit Facility, including declaring all advances under the terms of the Credit Facility immediately due and payable.

For a more detailed description of this related party credit facility, see Note 12, Related Parties.