Notes Payable

3 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

NOTES PAYABLE

NOTE 3 – NOTES PAYABLE

On May 24, 2019, the Company entered into an Asset Purchase Agreement (the “APA”) with Applied Optical Sciences, LLC (“AOS”) to acquire certain assets. As consideration for the APA, the Company entered into a promissory note issued to the shareholders of AOS for $2,500,000. The note is non-interest bearing and shall be repaid in equal installments, the first payment is due on February 10, 2021 and subsequent payments being due May, 24, 2021 and the remainder on the last day of each six-month period thereafter, the final such payment being due on November 24, 2022. The Promissory Note may be prepaid at any time (in whole or in part). Upon inception, the Company recorded a debt discount in the amount of $2,500,000 in relation to the transaction which is being amortized over the life of the loan as compensation expense. During the three months ended March 31, 2021, the Company made a payment in the amount of $500,000 for this promissory note. As of March 31, 2021 and December 31, 2020, the note is not in default.

On April 28, 2020, the Company entered into a loan agreement with Alliance Bank of Arizona, N.A. for a loan in the amount of $133,658 pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act enacted on March 27, 2020 (the “CARES Act”). This loan is evidenced by a promissory note dated April 27, 2020 and matures two years from the disbursement date. This loan bears interest at a rate of 1.00% per annum, with the first nine months of interest deferred. Principal and interest are payable monthly commencing nine months after the disbursement date and may be prepaid by the Company at any time prior to maturity with no prepayment penalties. This loan contains customary events of default relating to, among other things, payment defaults or breaches of the terms of the loan. Upon the occurrence of an event of default, the lender may require immediate repayment of all amounts outstanding under the note.

During the three months ending December 31, 2020, the Company converted $47,499 of notes payable into 158,329 shares of common stock.

The following reconciles notes payable as of March 31, 2021 and December 31, 2020:

	March 31, 2021			December 31, 2020
Beginning balance	$	2,681,157		$	4,697,890
Notes payable		117,209			4,456,760
Accrued interest		328			297,849
Transfer from prepaid		-			108,064
Initial beneficial conversion feature		-			(919,000	)
Amortize beneficial conversion feature		-			919,000
Payments on notes payable		(513,023	)		(1,480,951	)
Repayment of interest		-			(152,603	)
Converted into common stock		(47,499	)		(5,515,852	)
Total		2,238,172			2,681,157
Less-Notes payable - current		(1,225,991	)		(1,547,695	)
Notes payable - non-current	$	1,012,181		$	1,133,462

Future principal payments for the Company’s Notes as of March 31, 2021 are as follows:

2021	$	1,225,991
2022		1,012,181
Thereafter		-
Total	$	2,238,172

Of the $2,238,172 note payable balance, $1,225,991 are short term of which $1,000,000 are payments on the note to acquire Applied Optical Sciences and $1,012,181 are long term, of which $1,000,000 are payments on the note to acquire Applied Optical Sciences. Of the note to acquire Applied Optical Sciences, the first payment was due on February 10, 2021 and subsequent payments being due May, 24, 2021 and the remainder on the last day of each six-month period thereafter, the final such payment being due on November 24, 2022.