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Note 2 - Notes Receivable
6 Months Ended
Jun. 30, 2023
Notes to Financial Statements  
Financing Receivables [Text Block]

Note 2. Note Receivable

 

On October 13, 2022, the Company entered in a Securities Purchase Agreement (“SPA”) with respect to a secured $1,875,000 convertible note (“Convertible Note”) made by Embolx, Inc. (“Noteholder”), a California corporation.  The Convertible Note was purchased at a 20% ($375,000) original issue discount and was subject to a 9-month maturity, after which, if unpaid will then carry a 20% interest rate. The Company has recognized $250,000 in other income related to accretion of the discount on the Convertible Note for the six months ended June 30, 2023.   The Company has the option to convert the Convertible Note into shares of common stock of the Noteholder.  The Convertible Note is secured by essentially all assets of the Noteholder.  Under the SPA, the Company has a right to purchase additional notes and receive warrants on the same terms for a total potential investment amount of $2,000,000 with an additional over-allotment option of $500,000 as defined in the SPA. As additional consideration, the Company received a 5-year warrant to purchase shares of common stock of the Noteholder.  The shares are subject to certain piggyback registration rights under a Registration Rights Agreement.  The warrant is offered at 50% of the original principal amount and will be valued at the price per share of common stock paid in the first liquidity event following October 19, 2022.  The warrants expire five years from the original issue date. As of July 19, 2023 the note was in default and will carry an additional 20% interest.  On July 25, 2023 the Company agreed upon an extension and amendment to the Convertible Note (see Note 1).