NOTE 12 – SUBSEQUENT EVENTS

Advances under Loan and Security Agreement

On July 12 and August 13, 2019, we drew down advances of $750,000 and $900,000, respectively, available under the Loan and Security Agreement with Energy Capital entered into on October 1, 2018 by the Company and Energy Capital (see NOTE 8 for further details of the terms). The advance proceeds will be utilized primarily for operating capital.

Extensions of Certain Loan Agreements, Financing Agreements and Promissory Notes

On August 7, 8 and 9, 2019, effective as of July 31, 2019, the Company and certain lenders entered into amendments to their respective debt agreements and promissory notes wherein one lender extended the maturity date on his loan to September 30, 2021, and the remaining lenders extended the maturity date of their loans to October 31, 2019. In addition to extending the maturity dates of those instruments to October 31, 2019, those lenders agreed that if the Company completes an equity offering of not less than $8,000,000 on or before the maturity date, at or at less than a specified offering price per security, the lenders shall extinguish their indebtedness in exchange for securities of the Company upon the same terms and conditions of the investors in such equity offering, provided Energy Capital participates in an extinguishment of all the indebtedness owed to it under the Loan Agreement in such equity offering. 

Employee Severance

On August 7, 2019, the Company entered into Severance Agreements and General Release of Claims (the “Severance Agreements”) with certain members of the Company’s senior management (the “Senior Managers”). Pursuant to the Severance Agreements, the Senior Managers received accrued wages, accrued and unused paid-time off and other benefits due under employee benefit plans through the separation date.  Pursuant to the Severance Agreements, one Senior Manager will receive a derivative security to purchase 575,000 shares of common stock of the Company and the other Senior Manager will receive a derivative security to purchase 100,000 shares of common stock of the Company, which securities vest immediately subsequent to the next sale of common stock of the Company for gross proceeds of not less than $1 million in gross proceeds (the “Raise”) with an exercise price equal to the price per share of common stock in the Raise.  Additionally, each of the Senior Managers shall receive (i) $25,000 upon completion of the Raise and (ii) $50,000 upon the Company realizing from one or a series of transactions not less than $10 million in gross proceeds from the sale of common stock of the Company in addition to the Raise.  The Severance Agreements contain general releases on behalf of each of the Senior Managers.