Note 14 - Subsequent Events	12 Months Ended
Dec. 31, 2018
Notes to Financial Statements
Subsequent Events [Text Block]	Note 14. Subsequent Events. Management has evaluated subsequent events through the date of the filing of this Annual Report and management noted the following for disclosure. Debt obligations – Extension of notes due January 5, 2019 By letter dated January 3, 2019, we notified the holders of two promissory notes in the aggregate principal amount of $400,000 (the first held by Vernal Bay Investments, LLC (“Vernal”) in the original principal amount of $280,000, and the second held by Chappy Bean, LLC (“Chappy Bean”) in the original principal amount of $120,000 ) of our election to extend by 60 days, to March 6, 2019, the maturity dates of the notes (see Note 5 ). As provided in the notes, our election to extend increased the principal amount of each note by 10%, such that the aggregate principal balance of the two notes increased to $440,000 as of January 3, 2019. On March 5, 2019, we executed amendments to these two notes that extended the maturity dates initially to June 6, 2019, and provide that we may further extend the maturity dates to September 6, 2019 by giving written notice of such extension and increasing the principal due on the notes at that time by 10%. As consideration of the extension of the maturity dates reflected in the March 5, 2019 amendments, we (i) increased the annual percentage rate of interest from 12% to 18%, effective as of March 7, 2019, and (ii) lowered the exercise price, and increased the number of shares available, on warrants that had been previously issued to the two investors (at the time of their original investment). With respect to the warrants, Vernal Bay had been issued a warrant to purchase 1,387,500 shares at $0.25 per share, expiring September 19, 2023. We agreed to lower the exercise price to $0.20 per share, and proportionately increase the number of shares in the warrant to 1,734,375. By doing so, the maximum investment amount under the warrant of $346,875 remained the same. Chappy Bean’s warrant to purchase 600,000 shares was similarly modified, such that it now allows for the purchase of 750,000 shares at $0.20 per share. Debt Obligations –Convertible Note, matures April 15, 2019 ( Vista Capital) On January 7, 2019, we and Vista Capital agreed to amend the convertible promissory note originally issued December 14, 2017 ( “Vista 2017 Note”; see Note 5 ) and extend its maturity date to April 15, 2019. The principal amount of the note was increased to $605,100. The note will continue to earn interest at the rate of five percent per annum. The amendment re-defined the conversion price to equal 80% of the lowest closing bid price of the Company’s common stock during the 25 consecutive trading days immediately preceding the conversion date. The amendment also reduced the prepayment penalty from 20% to 15%, such that a prepayment requires the payment of an additional 15% of the then outstanding balance, and reduced the penalty for a default from 30% to 25% of the outstanding balance. Per the guidance of ASC 470 - 50, “Debt Modifications and Extinguishments,” modified terms are considered substantially different, if the present value of the cash flows after modification differ by at least 10% prior to the modification. With the increase in principal, the Vista 2017 Note met the 10% cash flow test and therefore the Company accounted for the transaction as an extinguishment of debt. The increased principal, and the warrant fair value treated as a fee for the extension, produced a $746,000 loss on extinguishment of the convertible debt. The new 5% Convertible Note is recorded at principal value with a 90 -day maturity. Subsequent to the January 7, 2019 amendment, Vista Capital has chosen to convert $225,000 of the Vista 2017 Note (credited to interest and then principal), and received an aggregate 1,679,248 shares of our common stock. We and Vista Capital have agreed to further extend the maturity date from April 15, 2019 to July 15, 2019, and as consideration have increased the principal balance of the note by 10%. Accounting for these conversions and the extension, the principal amount due on the note is $420,452 Concurrently with the January 7, 2019 extension of the Vista 2017 Note, Vista Capital invested an additional $300,000 and we issued a convertible promissory note (the “Vista 2019 Note”) in the principal amount of $330,000, maturing nine months from the date of issuance ( October 7, 2019). The Vista 2019 Note earned a one -time interest charge of 12%. The Vista 2019 Note allows Vista Capital to convert the note to our common stock at any time at a price equal to 65% of the lowest closing bid price of the Company’s common stock during the 25 consecutive trading days immediately preceding the conversion date. The Vista 2019 Note contains standard provisions of default, and precludes the issuance of shares to the extent that Vista Capital would beneficially own more than 4.99% of our common stock. We may pre-pay the Vista 2019 Note within 90 days of the issuance date by giving 10 business day notice of the intent to pre-pay, and then tendering 120% of the outstanding balance of the note. Vista Capital has the option to convert the note to common stock during the 10 -day period. The Vista 2019 Note also includes a term that allows Vista Capital to adopt any term of a future financing more favorable than what is provided in the note. For example, these provisions could include a more favorable interest rate, conversion price, or original issue discount. The Vista 2019 Note also requires that we include the shares underlying conversion of the note on the next registration statement we file with the SEC (but not the registration statement filed November 6, 2018). With respect to the above transactions with Vista Capital, Lincoln Park Capital Fund, LLC agreed to waive the provisions of the Purchase Agreement dated August 25, 2017, prohibiting variable rate transactions. As consideration for this waiver, we issued to Lincoln Park a warrant to purchase 250,000 shares of our common stock at $0.25 per share, expiring five years from the date of grant. In the event the shares underlying the warrant are not registered, the warrant allows the holder to do a “cashless” exercise. Debt Obligations – Payment of Note due January 11, 2019 ( Triton) On January 9, 2019, we tendered payment of the outstanding principal amount and interest due on the promissory note issued to Triton Funds, LP dated October 12, 2018 ( see Notes 5 and 7 ). Other than the outstanding warrants, we have no ongoing business dealings with Triton. Debt Obligations – Note due November 5, 2019 ( Tangiers Global) On January 31, 2019, we issued a 12% Convertible Promissory Note to Tangiers Global, LLC (“Tangiers”) in the aggregate principal amount of up to $495,000 (the “Tangiers Note”). The initial principal amount of the Tangiers Note is $330,000, for which Tangiers paid a purchase price of $300,000 on February 5, 2019, representing a 10% original issue discount, due November 5, 2019. As originally contemplated, we received an additional $150,000 from Tangiers pursuant to an amendment to the note dated March 7, 2019, increasing the principal amount due under the note to $495,000. The Tangiers Note is convertible at the option of Tangiers at a conversion price equal to 75% of the lowest closing bid price of the Company’s common stock during the 25 consecutive trading days prior to the conversion date. We may prepay the Tangiers Note up to 180 days after the effective date. If a prepayment is made within 90 days, we must pay a prepayment penalty of 25%; from 91 to 180 days, we must pay a prepayment penalty of 30%. We may pay such prepayment penalties, if we so choose, by issuing common stock at the conversion price. If such shares are not eligible for removal of restrictions pursuant to a registration statement or Rule 144 within 10 trading days following the six -month anniversary of the effective date, Tangiers may rescind the stock issuance and force the Company to pay the prepayment penalty in cash. Upon the occurrence of an event of default, as such term is defined under the Tangiers Note, additional interest will accrue from the date of the event of default at a rate equal to the lower of 22% per annum or the highest rate permitted by law, and an additional 25% shall be added to the principal amount of the note. In connection with the Tangiers Note, the Company caused its transfer agent to reserve 3,000,000 shares of the Company’s common stock, in the event that the Tangiers Note is converted. With respect to the above transaction with Tangiers, Lincoln Park consented to waive the provisions of the Purchase Agreement dated August 25, 2017 prohibiting variable rate transactions. As consideration for the consent, we agreed to issue Lincoln Park a stock purchase warrant allowing for the purchase of 50,000 shares of our common stock at $0.25 per share, expiring five years from the date of grant. In the event the shares underlying the warrant are not registered, the warrant allows the holder to do a “cashless” exercise. Chief Financial Officer Contract Extension On January 16, 2019, we agreed to extend the engagement agreement dated February 1, 2008 ( the “Engagement Agreement”, which had been previously extended multiple times) with our Chief Financial Officer, Charles K. Dargan, II. The Engagement Extension Agreement dated as of January 16, 2019 ( the “Engagement Extension Agreement”) provides for an additional term to expire September 30, 2019 ( the “Extended Term”), and is retroactively effective to the termination of the prior extension on September 30, 2018. Mr. Dargan has been serving as the Company’s Chief Financial Officer since such termination pursuant to the terms of the December 31, 2017 extension. For the Extended Term, Mr. Dargan was issued an option (“Option”) to purchase 300,000 shares of the Company’s common stock, at a strike price equal to the closing price of the Company’s common stock on January 16, 2019 of $0.223, to expire January 16, 2029, and to vest over the term of the engagement with 75,000 shares having vested as of December 31, 2018, and the remaining shares to vest 25,000 shares monthly beginning January 31, 2019, and each month thereafter, so long as the Engagement Agreement is in full force and effect. The Option was issued pursuant to the Company’s 2018 Equity Incentive Plan. The issuance of the Option is Mr. Dargan’s sole source of compensation for the Extended Term. As was the case in all prior terms of his engagement, there is no cash component of his compensation for this term. Mr. Dargan is eligible to be reimbursed for business expenses he incurs in connection with the performance of his services as the Company’s Chief Financial Officer (although he has made no such requests for reimbursement in the past). All other provisions of the Engagement Agreement not expressly amended pursuant to the Engagement Extension Agreement remain the same, including provisions regarding indemnification and arbitration of disputes. F- 35

Note

14.

Subsequent Events.

Management has evaluated subsequent events through the date of the filing of this Annual Report and management noted the following for disclosure.

Debt obligations – Extension of notes due

January 5, 2019

By letter dated

January 3, 2019,

we notified the holders of

two

promissory notes in the aggregate principal amount of

$400,000

(the

first

held by Vernal Bay Investments, LLC (“Vernal”) in the original principal amount of

$280,000,

and the

second

held by Chappy Bean, LLC (“Chappy Bean”) in the original principal amount of

$120,000

) of our election to extend by

days, to

March 6, 2019,

the maturity dates of the notes (see Note

). As provided in the notes, our election to extend increased the principal amount of each note by

10%,

such that the aggregate principal balance of the

two

notes increased to

$440,000

as of

January 3, 2019.

March 5, 2019,

we executed amendments to these

two

notes that extended the maturity dates initially to

June 6, 2019,

and provide that we

may

further extend the maturity dates to

September 6, 2019

by giving written notice of such extension and increasing the principal due on the notes at that time by

10%.

As consideration of the extension of the maturity dates reflected in the

March 5, 2019

amendments, we (i) increased the annual percentage rate of interest from

12%

18%,

effective as of

March 7, 2019,

and (ii) lowered the exercise price, and increased the number of shares available, on warrants that had been previously issued to the

two

investors (at the time of their original investment). With respect to the warrants, Vernal Bay had been issued a warrant to purchase

1,387,500

shares at

$0.25

per share, expiring

September 19, 2023.

We agreed to lower the exercise price to

$0.20

per share, and proportionately increase the number of shares in the warrant to

1,734,375.

By doing so, the maximum investment amount under the warrant of

$346,875

remained the same. Chappy Bean’s warrant to purchase

600,000

shares was similarly modified, such that it now allows for the purchase of

750,000

shares at

$0.20

per share.

Debt Obligations –Convertible Note, matures

April 15, 2019 (

Vista Capital)

January 7, 2019,

we and Vista Capital agreed to amend the convertible promissory note originally issued

December 14, 2017 (

“Vista

2017

Note”; see Note

) and extend its maturity date to

April 15, 2019.

The principal amount of the note was increased to

$605,100.

The note will continue to earn interest at the rate of

five

percent per annum. The amendment re-defined the conversion price to equal

80%

of the lowest closing bid price of the Company’s common stock during the

consecutive trading days immediately preceding the conversion date. The amendment also reduced the prepayment penalty from

20%

15%,

such that a prepayment requires the payment of an additional

15%

of the then outstanding balance, and reduced the penalty for a default from

30%

25%

of the outstanding balance.

Per the guidance of ASC

470

50,

“Debt Modifications and Extinguishments,” modified terms are considered substantially different, if the present value of the cash flows after modification differ by at least

10%

prior to the modification. With the increase in principal, the Vista

2017

Note met the

10%

cash flow test and therefore the Company accounted for the transaction as an extinguishment of debt. The increased principal, and the warrant fair value treated as a fee for the extension, produced a

$746,000

loss on extinguishment of the convertible debt. The new

Convertible Note is recorded at principal value with a

-day maturity.

Subsequent to the

January 7, 2019

amendment, Vista Capital has chosen to convert

$225,000

of the Vista

2017

Note (credited to interest and then principal), and received an aggregate

1,679,248

shares of our common stock. We and Vista Capital have agreed to further extend the maturity date from

April 15, 2019

July 15, 2019,

and as consideration have increased the principal balance of the note by

10%.

Accounting for these conversions and the extension, the principal amount due on the note is

$420,452

Concurrently with the

January 7, 2019

extension of the Vista

2017

Note, Vista Capital invested an additional

$300,000

and we issued a convertible promissory note (the “Vista

2019

Note”) in the principal amount of

$330,000,

maturing

nine

months from the date of issuance (

October 7, 2019).

The Vista

2019

Note earned a

one

-time interest charge of

12%.

The Vista

2019

Note allows Vista Capital to convert the note to our common stock at any time at a price equal to

65%

of the lowest closing bid price of the Company’s common stock during the

consecutive trading days immediately preceding the conversion date. The Vista

2019

Note contains standard provisions of default, and precludes the issuance of shares to the extent that Vista Capital would beneficially own more than

4.99%

of our common stock. We

may

pre-pay the Vista

2019

Note within

days of the issuance date by giving

business day notice of the intent to pre-pay, and then tendering

120%

of the outstanding balance of the note. Vista Capital has the option to convert the note to common stock during the

-day period. The Vista

2019

Note also includes a term that allows Vista Capital to adopt any term of a future financing more favorable than what is provided in the note. For example, these provisions could include a more favorable interest rate, conversion price, or original issue discount. The Vista

2019

Note also requires that we include the shares underlying conversion of the note on the next registration statement we file with the SEC (but

not

the registration statement filed

November 6, 2018).

With respect to the above transactions with Vista Capital, Lincoln Park Capital Fund, LLC agreed to waive the provisions of the Purchase Agreement dated

August 25, 2017,

prohibiting variable rate transactions. As consideration for this waiver, we issued to Lincoln Park a warrant to purchase

250,000

shares of our common stock at

$0.25

per share, expiring

five

years from the date of grant. In the event the shares underlying the warrant are

not

registered, the warrant allows the holder to do a “cashless” exercise.

Debt Obligations – Payment of Note due

January 11, 2019 (

Triton)

January 9, 2019,

we tendered payment of the outstanding principal amount and interest due on the promissory note issued to Triton Funds, LP dated

October 12, 2018 (

see Notes

and

). Other than the outstanding warrants, we have

ongoing business dealings with Triton.

Debt Obligations – Note due

November 5, 2019 (

Tangiers Global)

January 31, 2019,

we issued a

12%

Convertible Promissory Note to Tangiers Global, LLC (“Tangiers”) in the aggregate principal amount of up to

$495,000

(the “Tangiers Note”). The initial principal amount of the Tangiers Note is

$330,000,

for which Tangiers paid a purchase price of

$300,000

February 5, 2019,

representing a

10%

original issue discount, due

November 5, 2019.

As originally contemplated, we received an additional

$150,000

from Tangiers pursuant to an amendment to the note dated

March 7, 2019,

increasing the principal amount due under the note to

$495,000.

The Tangiers Note is convertible at the option of Tangiers at a conversion price equal to

75%

of the lowest closing bid price of the Company’s common stock during the

consecutive trading days prior to the conversion date. We

may

prepay the Tangiers Note up to

180

days after the effective date. If a prepayment is made within

days, we must pay a prepayment penalty of

25%;

from

180

days, we must pay a prepayment penalty of

30%.

may

pay such prepayment penalties, if we so choose, by issuing common stock at the conversion price. If such shares are

not

eligible for removal of restrictions pursuant to a registration statement or Rule

144

within

trading days following the

six

-month anniversary of the effective date, Tangiers

may

rescind the stock issuance and force the Company to pay the prepayment penalty in cash. Upon the occurrence of an event of default, as such term is defined under the Tangiers Note, additional interest will accrue from the date of the event of default at a rate equal to the lower of

22%

per annum or the highest rate permitted by law, and an additional

25%

shall be added to the principal amount of the note.

In connection with the Tangiers Note, the Company caused its transfer agent to reserve

3,000,000

shares of the Company’s common stock, in the event that the Tangiers Note is converted.

With respect to the above transaction with Tangiers, Lincoln Park consented to waive the provisions of the Purchase Agreement dated

August 25, 2017

prohibiting variable rate transactions. As consideration for the consent, we agreed to issue Lincoln Park a stock purchase warrant allowing for the purchase of

50,000

shares of our common stock at

$0.25

per share, expiring

five

years from the date of grant. In the event the shares underlying the warrant are

not

registered, the warrant allows the holder to do a “cashless” exercise.

Chief Financial Officer Contract Extension

January 16, 2019,

we agreed to extend the engagement agreement dated

February 1, 2008 (

the “Engagement Agreement”, which had been previously extended multiple times) with our Chief Financial Officer, Charles K. Dargan, II. The Engagement Extension Agreement dated as of

January 16, 2019 (

the “Engagement Extension Agreement”) provides for an additional term to expire

September 30, 2019 (

the “Extended Term”), and is retroactively effective to the termination of the prior extension on

September 30, 2018.

Mr. Dargan has been serving as the Company’s Chief Financial Officer since such termination pursuant to the terms of the

December 31, 2017

extension.

For the Extended Term, Mr. Dargan was issued an option (“Option”) to purchase

300,000

shares of the Company’s common stock, at a strike price equal to the closing price of the Company’s common stock on

January 16, 2019

$0.223,

to expire

January 16, 2029,

and to vest over the term of the engagement with

75,000

shares having vested as of

December 31, 2018,

and the remaining shares to vest

25,000

shares monthly beginning

January 31, 2019,

and each month thereafter, so long as the Engagement Agreement is in full force and effect. The Option was issued pursuant to the Company’s

2018

Equity Incentive Plan.

The issuance of the Option is Mr. Dargan’s sole source of compensation for the Extended Term. As was the case in all prior terms of his engagement, there is

cash component of his compensation for this term. Mr. Dargan is eligible to be reimbursed for business expenses he incurs in connection with the performance of his services as the Company’s Chief Financial Officer (although he has made

such requests for reimbursement in the past). All other provisions of the Engagement Agreement

not

expressly amended pursuant to the Engagement Extension Agreement remain the same, including provisions regarding indemnification and arbitration of disputes.

F-