Convertible Notes Payable

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Convertible Notes Payable

On January 2, 2015, the Company issued a Bridge Note in the principal amount of $36,500 and issued 73,000 shares of its common stock to the purchaser of the Bridge Note. Additionally, the Company issued 500,000 shares of its common stock in January 2015 to certain investors who purchased Bridge Notes during the year ended December 31, 2014. 

On June 30, 2015, the Company issued two additional Bridge Notes in the aggregate principal amount of $50,000 and issued an aggregate total of 100,000 shares of its common stock to the purchasers of these Bridge Notes. In connection with the issuance of these notes, the Company recorded debt discount expense totaling $2,830 and has amortized these costs over the life of the notes.

In June 2015, the Company authorized the issuance of an aggregate total of 1,875,691 shares of its common stock as payment for accrued interest for the period from January 1, 2015 through June 30, 2015 under certain convertible notes payable. The Company settled a total of $70,256 in accrued interest, recognizing a gain on settlement in the amount of $23,364. The Company and the holders of the Bridge Notes also agreed to extend the maturity date of the Bridge Notes from June 30, 2015 to December 31, 2015. As consideration for the extension of the maturity date of the Bridge Notes, the Company issued an aggregate total of 286,500 shares of its common stock to the Bridge Note holders. These Bridge Notes are now payable on demand.

In July 2015, the Company issued a Bridge Note in the principal amount of $35,000 and issued an aggregate total of 70,000 shares of its common stock to the purchaser of the Bridge Note.

On March 31, 2016, Burnham Hill Advisors, LLC (“BHA”) agreed to exchange the amounts owed to BHA under the October 29, 2013 agreement for a promissory note, on terms substantially similar to the Bridge Notes (the “BHA Note”), in the principal amount of $283,000 with the issuance date of March 31, 2016. The BHA Note is payable on demand as of December 31, 2016, and was past due as of September 30, 2017. On April 1, 2017, BHA assigned the BHA Note to certain of its then employees, including Michael Abrams, who serves as a director of the Company, under the same terms.

During each of the quarters ended March 31, 2017 and June 30, 2017, the Company issued an MOU Note in the principal amount of $25,000. 

In July and August 2017, the Company issued certain investors Bridge Notes in the aggregate principal amount of $86,000 (the “2017 Bridge Notes”). Each 2017 Bridge Note accrues interest at a rate of 10% per annum, and matured on September 30, 2017. The 2017 Bridge Notes are now payable on demand.

In October 2017, the Company issued an additional MOU Note in the principal amount of $15,000.

The three MOU Notes, with an aggregate principal amount of $65,000, were all cancelled and applied as part of the purchase price in the Preprogen Transaction.

In September 2018, the Company paid three of its note holders an aggregate of $60,750 to settle $121,500 of note principal plus $47,637 of accrued interest.

At September 30, 2018 and December 31, 2017, the Company’s Convertible Notes Payable and Accrued Interest were as follows:

	September 30, 2018		December 31, 2017
Notes Payable and accrued interest payable	$	1,820,511	$	1,825,135
Notes Payable and accrued interest payable, related party		131,936		120,611
Total notes payable	$	1,952,447	$	1,945,746

Notes Payable, Related Party

As of September 30, 2018, the Company owed Michael Abrams, a director of the Company, an aggregate total of $131,936 for outstanding principal and accrued and unpaid interest the BHA Notes. As of December 31, 2017, the Company owed Mr. Abrams an aggregate total of $120,611 for outstanding principal and accrued and unpaid interest on the BHA Notes. Mr. Abrams was formerly affiliated with BHA.

On April 1, 2017, BHA assigned the BHA Notes, including all accrued but unpaid interest to its employees, and is no longer a related party note payable. As noted above, Michael Abrams, one of the Company’s directors and previously an affiliate of BHA, was assigned $50,000 of the outstanding principal amount of the BHA Note, plus all accrued and unpaid interest on such amount.