Note 14 – Subsequent Events

The Company has evaluated all events that occurred after the balance sheet date of March 31, 2020, through September 3, 2020, the date when financial statements were available to be issued to determine if they must be reported. The Company's subsequent events are as follows:

Notes Payable

On March 28, 2020, the Company entered into a convertible promissory note with a principal balance of $257,732. The notes contains an OID totaling $7,732, matures on March 29, 2021 and accrues interest at a rate of 12% per annum. The note was not fully executed until April 2, 2020. In connection with the convertible promissory note, the Company issued 100,000 shares of its common stock with a fair value of $91,000.

From April 29, 2020 through June 3, 2020, the Company entered into convertible promissory notes with a principal balance of approximately $1.8 million. The notes contain an OID of approximately $23,000 and the Company received net proceeds of $1.8 million. The notes bear interest at 12% per annum and mature one year from the issuance date. In connection with the convertible promissory notes, the Company issued 800,000 shares of its common stock with a fair value of $0.7 million.

Subsequent to March 31, 2020, a portion of the Company's convertible notes have been converted into shares of the Company's common stock. The number of shares issued in connection with conversion of the notes issued prior to March 31, 2020 totaled 3,050,141 (See Note 8). The number of shares issued in connection with conversion of the notes issued subsequent to March 31, 2020, totaled 4,644,184.

As of March 31, 2020, the Company owed approximately $53,000 to an employee of the Company, which is recorded in accounts payable in the accompanying condensed balance sheet. The employee paid approximately $53,000 directly to Oregon State University in satisfaction of the Company's lease liability for the period August 2019 – February 2020. On April 10, 2020, the Company entered into a note payable with a principal balance of approximately $53,000, in place of the accounts payable balance. The note matures on May 15, 2020, and default interest is due at a rate of 8% if the Company fails to make an installment payment by the due date. During the three months ended June 30, 2020, the Company made installment payments timely, and as of June 30, 2020 the notes principal balance was paid in full.

Common Stock

Subsequent to March 31, 2020, the Company issued 10 shares of common stock and 4,000,000 shares of fully vested restricted common stock to its Chief Executive Officer. The Company purchased 500,000 shares of the restricted stock, at a fair value of approximately $0.5 million, to reimburse the Company's Chief Executive Officer for amounts previously lent to the Company, to pay deferred compensation to the Chief Executive Officer and to cover the withholding taxes related to the restricted stock.

Subsequent to March 31, 2020, the Company issued 210,000 shares of its common stock with a fair value of $0.2 million to investors.

On April 27, 2020, the Company issued 162,447 shares of its common stock in satisfaction of accounts payable of approximately $122,000 owed for advisory services.

On May 5, 2020, the Company issued 100,000 shares of its common stock with a fair value of approximately $0.1 million in connection with a consulting agreement.

On June 6, 2020, the Company issued a warrant to purchase 350,000 shares of the Company's common stock with a fair value of approximately $0.1 million. The warrant was exercised on June 30, 2020, and the Company issued 291,667 shares of its common stock.

Stock Options

On April 13, 2020, the Company granted 6,970,000 options to purchase shares of its common stock with a fair value of approximately $3.2 million to executives and employees of the Company. The options will vest over a period of 24 months.

Subsequent to March 31, 2020, the Company granted 1,366,667 options to purchase shares of its common stock with a fair value of approximately $0.3 million for consulting services.

In June 2020, the Company granted 100,000 options to purchase shares of its common stock with a fair value of approximately $40,000 to members of the Company's Board of Directors.

On June 22, 2020, the Company's Board of Directors adopted a resolution to accelerate the vesting of all options granted to be fully vested as of June 22, 2020.

PPP Loan

On April 24, 2020, the Company entered into a Promissory Note dated April 24, 2020 (the "PPP Note") with Newtek Corp AVB as the lender (the "Lender"), pursuant to which the Lender agreed to make a loan to the Company under the Paycheck Protection Program (the "PPP Loan") offered by the U.S. Small Business Administration (the "SBA") in a principal amount of $197,200 pursuant to Title 1 of the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act").

The PPP Loan proceeds are available to be used to pay for payroll costs, including salaries, commissions, and similar compensation, group health care benefits, and paid leaves; rent; utilities; and interest on certain other outstanding debt. The amount that will be forgiven will be calculated in part with reference to the Company's full time headcount during the eight week period following the funding of the PPP Loan.

The interest rate on the PPP Note is a fixed rate of 1% per annum. To the extent that the amounts owed under the PPP Loan, or a portion of them, are not forgiven, the Company will be required to make principal and interest payments in monthly installments beginning seven months from April 2020. The PPP Note matures in two years.

The PPP Note includes events of default. Upon the occurrence of an event of default, the Lender will have the right to exercise remedies against the Company, including the right to require immediate payment of all amounts due under the PPP Note.

Subsequent to March 31, 2020, the Company received an Economic Injury Disaster Loan totaling $8,000 from the U.S. Small Business Administration.