Notes Payable

3 Months Ended

Mar. 31, 2020

Notes Payable [Abstract]

NOTES PAYABLE

8. NOTES PAYABLE

During the three months ended March 31, 2020, the company entered into a premium financing agreement to finance its director and officer insurance policy. The principal is approximately $108,000, with nine monthly payments of $12,498 and an interest rate of 9.7% the balance at March 31, 2020 is $96,000 included in current notes payable.

During the three months ended March 31, 2019, the company received $400,000 from three non-affiliated individuals based on 10% Promissory Notes ("Notes"). The Notes matured September 1, 2019. The Notes are accompanied by a Common Stock Purchase Warrant (a "Warrant") entitling the holder to purchase one share of the company's common stock, par value $0.001 per share (the "Common Shares"), for each $2.00 of Note principal, at an exercise price of $0.07 per share, for two years from the date of issuance. The company issued 200,000 warrants along with the notes. The company determine the fair value of warrant grant at their grant date, using a Black-Scholes-Merton Option-Pricing Model. The balance of these notes is $444,000 at March 31, 2020 and $434,000 at December 31, 2019. Interest expense on these notes was $10,000 for the quarter ended March 31, 2020 and $4,000 for the quarter ended March 31, 2019.

The following reconciles notes payable as of March 31, 2020 and December 31, 2019:

	March 31, 2020			December 31, 2019
Notes payable	$	4,988,065		$	4,880,000
Accrued interest		176,423			119,218
Payments on notes payable		(205,226	)		(85,657	)
Transfer from prepaid		54,329			54,329
		-
	$	5,013,591		$	4,967,890

Of the notes payable at March 31, 2020 $1,151,000 were due September 1, 2019 and $1,267,000 were due December 1, 2019, $96,000, payable monthly over eight monthly payments, is due December 12, 2020, and $2,500,000 is payable in $500,000 semi-annual payments starting May 24, 2020 and is due May 24, 2022. The notes due on September 1, 2019 and December 31, 2019 have an interest rate of 10%, the note due on December 12, 2020 has an interest rate of 9.7%, and the note due on May 24, 2022 has interest rate of 0%. All notes are unsecured and not convertible. Interest expense on these notes was $58,000 for the quarter ended March 31, 2020 and $4,000 for the quarter ended March 31, 2019.