Changes in Stockholders' Deficit

3 Months Ended

Mar. 31, 2020

Stockholders' deficit:

Changes in Stockholders' Deficit

The following table summarizes the changes in stockholders’ deficit for the three month periods ending March 31, 2020 and March 31, 2019:

	Common Stock				Additional Paid in		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance – December 31, 2019		32,680,984	$	327,000	$	21,437,000		(22,554,000	)	$	(790,000	)
Shares issued in connection with private placement*		2,842,856		28,000		171,000					199,000
Shares issued to Cherokee in connection with loan		300,000		3,000		18,000					21,000
Share based payment expense						1,000					1,000
Shares issued for board meeting attendance in lieu of cash		23,253		*		5,000					5,000
Net loss								(325,000	)		(325,000	)
Balance – March 31, 2020		35,847,093	$	358,000	$	21,632,000	$	(22,879,000	)	$	(889,000	)
Balance – December 31, 2018		32,279,368	$	323,000	$	21,404,000	$	(21,873,000	)	$	(146,000	)
Shares issued to Cherokee in connection with loan		200,000		2,000		12,000					14,000
Shares issued for board meeting attendance in lieu of cash		38,993		*		3,000					3,000
Share based payment expense						2,000					2,000
Net loss								(240,000	)		(240,000	)
Balance-March 31, 2019		32,518,361	$	325,000	$	21,421,000	$	(22,113,000	)	$	(367,000	)

PRIVATE PLACEMENT

On February 20, 2020, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Chaim Davis (the Chairman of our Board of Directors) and certain other accredited investors (the “Investors”), pursuant to which we agreed to issue and sell to the Investors in a private placement (the “Private Placement”), 2,842,857 Units (the “Units”).

Each Unit consists of one (1) share of our common stock, par value $0.01 per share (“Common Share”), at a price per Unit of $0.07 (the “Purchase Price”) for aggregate gross proceeds of approximately $199,000. We received net proceeds of $199,000 from the Private Placement as expenses related to the Private Placement were minimal. We did not utilize a placement agent for the Private Placement. We used the net proceeds for working capital and general corporate purposes.

The July 2019 Term Loan with Chaim Davis, Et Al and the December 2019 Convertible Note (See Note E); totaling $39,000, were both converted into equity as part of a private placement closed in February 2020. Any interest that was incurred under the July 2019 Term Loan with Chaim Davis, Et in 2019 and up to the conversion in February 2020 was forgiven by the holders and the December 2019 Convertible Note did not bear any interest.

We do not intend to register the Units issued under the Private Placement; rather the Units issued will be subject to the holding period requirements and other conditions of Rule 144.

The Purchase Agreement contains customary representations, warranties and covenants made solely for the benefit of the parties to the Purchase Agreement. Although our Chairman of the Board was an investor in the Private Placement, the pricing of the Units was determined by the non-affiliate investors.