NOTE

– NOTES PAYABLE

The balances of notes payable were as follows:

	Due Date	As of June 30, 2020		As of December 31, 2019
Bridge loan	September 30, 2020	$	1,721,776	$	1,989,104
Promissory note 2019	September 30, 2020		980,833		680,833
Promissory note 2020 T1	September 30, 2020		490,000		-
Promissory note 2020 T2	September 30, 2020		480,000		-
Promissory note 2020 T3	September 30, 2020		480,000		-
Paycheck Protection Plan	April 20, 2022		541,867
Short term borrowing	May 26, 2020		-		18,563
Short term borrowing	June 10, 2020		-		147,783
Short term borrowing	June 20, 2020		-		194,943
Dr. Schwartz notes	September 30, 2020		-		2,115,000
Total Notes Payable, gross			4,694,476		5,146,226
Less: Unamortized discount			282,099		350,426
Total Notes Payable, net		$	4,412,377	$	4,795,800

Bridge Loan

September 2018,

the Company issued convertible secured promissory notes to

two

private investors in the original principal amount of an aggregate

$2,297,727

(the “bridge loan”) in exchange for cash proceeds of

$2,000,000.

As additional consideration for the loan, the Company issued an aggregate

65,000

shares of its common stock as inducement shares plus warrants to acquire up to an aggregate

107,178

shares of common stock at an exercise price of

$11.55

per share. Pursuant to a security agreement between the Company and the investors, the Company granted to the investors a security interest in its assets to secure repayment of the note. The bridge loan accrues interest at a rate of

per annum. In

February 2019,

the Company entered into a forbearance agreement with the bridge loan investors pursuant to which, among other things, the investors agreed to forbear on their rights to accelerate the bridge loan based on an event of default and a claimed event of default. In connection with such forbearance, an additional

$344,659

in principal and an additional

16,667

common shares were issued to the investors. In

September 2019,

the bridge loan of

one

investor was paid in full. On

March 19, 2020,

the Company and the remaining investor agreed to extend the note maturity to

June 28, 2020.

The Company and the investor further agreed to extend the due date to

July 15, 2020

and then in

July 2020

agreed to extend to

September 30, 2020.

See

Note

– Subsequent Events

payment penalties were paid in relation to payments on the bridge loan during the

three

and

six

months ended

June 30, 2020

and

$430,444

in payment penalties were accrued but

not

paid as of

June 30, 2020.

The outstanding principal balance of the bridge loan as of

June 30, 2020

was

$1,721,776,

with an unamortized discount of

$52,909.

Each investor received the right to convert all or any part of its bridge loan into shares of the Company's common stock at a conversion factor that is the lesser of a discounted

-day average price or a set price floor. The number of conversion shares that

may

be issued is subject to an exchange cap such that the sum of (

) the total number of conversion shares plus (

) the number of inducement shares is limited to an aggregate

267,833

shares. As of

June 30, 2020,

the maximum number of conversion shares have been issued,

additional shares are available to be issued related to this conversion option. During the

six

months ended

June 30, 2020

and

2019,

the investors converted

$267,328

and

$238,573

of the principal balance, respectively and received

170,000

and

55,859

shares of the Company's common stock, respectively.

Dr. Schwartz Notes

November 2018,

Dr. Schwartz made a loan to the Company with a principal balance of

$370,000.

As of

December 31, 2018,

one

promissory note was held with a principal balance of

$370,000

and an unamortized discount of

$63,028.

From

November 30, 2018

through

July 15, 2019,

Dr. Schwartz made numerous loans to the Company in the total amount of

$1,920,000

under

two

promissory notes. As consideration for these amounts, Dr. Schwartz received promissory notes and warrants to purchase

22,129

shares of the Company's common stock at

$8.36

per share. Further, beginning on

February 1, 2019

and the

first

day of each calendar month thereafter while the note remained outstanding, a number of additional warrants were issued. Beginning in

October 2019,

the Company and Dr Schwartz began to renegotiate the note. Due to the negotiations, the Company did

not

issue any additional warrants because they would be cancelled under the new deal.

During

January 2020,

the Company entered into an exchange agreement with Dr. Schwartz. Under the exchange agreement, the

two

outstanding notes were cancelled and in exchange a new promissory note in the amount of

$2,115,000

bearing

12%

interest per annum and maturing on

September 30, 2020

was issued. In addition to the promissory note, Dr. Schwartz received

50,000

shares of the Company's common stock. All warrants issued under the prior promissory notes were cancelled under the exchange agreement;

rights and obligations remain under the cancelled notes. The Company determined that the exchange agreement had, in substance, occurred at

December 31, 2019.

Effective as of

April 21, 2020,

the Company and Carl Schwartz, entered into an exchange agreement relating to a promissory note of the Company dated

January 31, 2020

issued by the Company in the principal amount of

$2,115,000.

The note bore

twelve

percent (

12%

) interest per annum and had a maturity date of

September 30, 2020.

The accrued interest on the note through

April 21, 2020

was

$77,878,

resulting in a total balance of

$2,192,878

in principal and accrued interest on the Note as of such date. Dr. Schwartz and the Company agreed to exchange the note for newly issued shares of common stock of the Company at market value. Pursuant to the exchange agreement, Dr. Schwartz was issued

1,533,481

shares of newly issued common stock at an exchange rate of

$1.43

per share, equal to the closing price of the common stock on

April 21, 2020.

Dr. Schwartz agreed (

)

not

to sell or otherwise transfer

766,740

shares for

three

months after the date of the exchange agreement, and (

)

not

to sell or otherwise transfer the remaining

766,741

shares for

six

months after the date of the exchange agreement.

Promissory Note

2019

During

September 2019,

the Company issued a promissory note with a principal amount of

$847,500

in exchange for cash proceeds of

$700,000.

Pursuant to a security agreement between the Company and the investor, the Company has granted to the investor a security interest in its assets to secure repayment of the note. As additional consideration for the loan, the Company issued an aggregate

8,857

shares of its common stock to the investor plus warrants to acquire up to

68,237

shares of the Company's common stock at an exercise price of

$6.21

per share. The warrants are exercisable beginning on the

sixth

month anniversary of the effective date through the

fifth

-year anniversary thereof. The note accrues interest at a rate of

per annum.

March 19, 2020,

the Company entered into an agreement to extend the due date of its outstanding notes payable from

March 27, 2020

and

March 31, 2020

June 27, 2020.

The Company increased the principal amount due on the notes payable by

$300,000

and issued

30,000

shares of its common stock as consideration for the extension. The change in value resulting from the extension exceeded

10%

and as a result the extension was accounted for as an extinguishment under ASC

470,

Debt

. During the

first

quarter of

2020,

the Company incurred a

$300,000

loss on debt extinguishment related to extensions of notes payable. The Company and the investor further agreed to extend the due date to

July 15, 2020

and then in

July 2020

agreed to extend to

September 30, 2020.

See

Note

– Subsequent Events

payment penalties were paid in relation to payments on this promissory note during the

three

and

six

months ended

June 30, 2020

and

$196,167

in payment penalties were accrued but

not

paid as of

June 30, 2020.

As of

June 30, 2020,

the remaining balance on the promissory note was

$980,833

with

zero

unamortized discount.

Promissory Note

2020

February 5, 2020,

the Company issued a promissory note with a principal amount of

$1,450,000

in exchange for cash proceeds of

$1,200,000.

Distributions of proceeds under the note were to be made in

three

tranches. Net proceeds of

$400,000

were received for the first, second, and

third

tranches on

February 5, 2020,

March 5, 2020,

and

April 5, 2020,

respectively. Pursuant to a security agreement between the Company and the investor, the Company has granted to the investor a security interest in its assets to secure repayment of the note. The note accrues interest at a rate of

per annum. Subject to certain limitations, the outstanding principal amount of the note and interest thereon are convertible at the election of the investor into shares of the Company's common stock at a conversion price equal to

$2.589.

payment penalties were paid in relation to payments on this promissory note during the

three

and

six

months ended

June 30, 2020

and

$290,000

in payment penalties were accrued but

not

paid as of

June 30, 2020.

As of

June 30, 2020,

the outstanding balance on the promissory note was

$1,450,000

with an unamortized discount of

$229,190.

The note contains a conversion feature and a put which were determined to be derivatives and are discussed further below. The Company and the investor agreed to extend the due date in

July 2020

September 30, 2020.

See

Note

– Subsequent Events

As additional consideration, the Company issued to the investor warrants to purchase

94,631,

92,700

and

92,700

shares of the Company's common stock at the closing of the first,

second

and

third

tranches, respectively. The warrants are exercisable beginning on the

sixth

month anniversary of the issuance date at an exercise price equal

$2.992

per share. The Company also issued

46,875

shares of its common stock to the investor at the closing of the

first

tranche.

Short Term Borrowings

The Company entered into short-term borrowings with an investor. The maturity date of the notes is

six

months after the dates of issuance with interest rates of

payable at maturity. Repayment of such notes is subject to a premium. During the

three

and

six

months ended

June 30, 2020,

the Company issued short term notes for a total of

$1,098,684

for cash proceeds of

$1,020,000

and repaid

$1,459,973

of principal using a portion of proceeds from the equity financing facility. Payment penalties of

$247,327

were paid in relation to payments on these short-term borrowings during the

six

months ended

June 30, 2020.

There were

amounts outstanding under the short-term borrowings as of

June 30, 2020.

April 2020

Paycheck Protection Program

April 20, 2020,

the Company entered into a promissory note with Park State Bank, which provides for an unsecured loan of

$541,867

pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act and applicable regulations (the “CARES Act”). The promissory note has a term of

years with a

per annum interest rate. Payments are deferred for

months from the date of the promissory note and the Company can apply for forgiveness of all or a portion of the promissory note after

days for covered use of funds.

Pursuant to the terms of the PPP, the promissory note, or a portion thereof,

may

be forgiven if proceeds are used for qualifying expenses as described in the CARES Act, such as payroll costs, costs used to continue group health care benefits, mortgage interest payments, rent and utilities. The Company intends to use all proceeds for qualifying expenses. However, there is

assurance that we will be able to obtain forgiveness of this loan. The terms of the promissory note, including eligibility and forgiveness,

may

be subject to further requirements in regulations and guidance adopted by the Small Business Administration.