Notes Payable

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Notes Payable

4. Notes Payable

Convertible Notes Payable

The table below summarizes all convertible notes outstanding as of June 30, 2023. Those with similar characteristics outstanding as of June 30, 2023 are grouped separately. The following abbreviations are used in the column headings: DIC is Debt Issuance Cost, OID is Original Issue Discount, Wts are warrants, CNC is Capitalized Note Cost and BCF is Beneficial Conversion Feature. Also included are repayments by conversion, exchange or otherwise during or prior to the three-month period ended June 30, 2023:

Inception Date	Maturity date	Original Principal Amount		Interest rate			Original aggregate DIC, OID, Wts, CNC and BCF			Cumulative amortization of DIC, OID, Wts, CNC and BCF		Accrued coupon interest		Repayment by conversion, increase in principal amount, net where appropriate			Balance sheet carrying amount at June 30, 2023 inclusive
November 5, 2014	September 15, 20161	$	25,000		10	%	$	-		$	-	$	32,649	$	-		$	57,649
November 5, 2014	September 15, 20161		25,000		10	%		-			-		32,649		-			57,649
November 5, 2014	September 15, 20161		25,000		12	%		-			-		42,443		-			67,443
Sub-total			75,000					-			-		107,741		-			182,741
December 31, 2018	February 28, 20192		25,000		10	%		-			-		14,068		-			39,068
January 2, 2019	February 28, 20192		10,000		10	%		-			-		5,627		-			15,627
Sub-total			35,000					-			-		19,695		-			54,695
May 17, 2019	May 17, 20203		50,000		10.00	%		(50,000	)		50,000		5,001		(52,253	)		2,748
July 28, 2020	June 30, 20223		53,000		8.00	%		(13,000	)		13,000		11,196		(16,247	)		47,949
February 17, 2021	June 17, 20223		112,000		10.00	%		(112,000	)		112,000		13,483		(80,000	)		45,483
April 1, 2021	July 31, 20223		112,500		24.00	%		(112,500	)		112,500		67,943		(42,400	)		138,043
May 3, 2021	July 31, 20223		150,000		10.00	%		(150,000	)		150,000		-		(150,000	)		-
May 10, 2021	August 10, 20223		150,000		10.00	%		(150,000	)		150,000		27,185		(13,213	)		163,972
June 30, 2021	June 29, 20223		115,000		24.00	%		(115,000	)		115,000		35,073		-			150,073
August 31, 2021	August 31, 20223		115,000		10.00	%		(109,675	)		109,675		21,047		-			136,047
October 7, 2021	October 7, 20223		115,000		10.00	%		(96,705	)		96,705		19,881		-			134,881
December 23, 2021	June 21, 20223		87,000		10.00	%		(36,301	)		36,301		40,810		(23,160	)		104,650
April 14, 2022	April 14, 20233		27,778		10.00	%		(15,936	)		15,936		3,364		-			31,142
August 22, 2022	May 31, 20233		66,667		10.00	%		(6,667	)		6,667		5,699		-			72,366
August 22, 2022	May 31, 20233		22,222		10.00	%		(2,222	)		2,222		1,900		-			24,122
August 22, 2022	May 31, 20233		16,667		10.00	%		(1,667	)		1,434		1,009		-			943
Sub-total			1,192,834					(971,673	)		971,440		253,590		(393,773	)		1,052,418
Total		$	1,302,834				$	(971,673	)	$	971,440	$	381,026	$	(393,773	)	$	1,289,854

1	These convertible notes were sold to investors in 2014 and 2015 (“Original Convertible Notes) and have a fixed interest rate of 10% per annum and in the case of the one note for which a notice of default has been received, 12%. The Original Convertible Notes have no reset rights or other protections based on subsequent equity transactions, equity-linked transactions or other events and are convertible into an aggregate of 1,560 shares of Common Stock as of June 30, 2023. As of June 30, 2023, principal and accrued interest on the Original Convertible Note that is subject to a default notice totaled $67,443, of which $42,443 was accrued interest.
2	On December 31, 2018 and January 2, 2019, the Company issued convertible notes to a single investor totaling $35,000 of maturity amount with accrued interest of $19,695 as of June 30, 2023. The number of shares of common stock (or preferred stock) into which these notes may convert is not determinable.
3	These fourteen convertible notes were issued between May 17, 2019 and August 22, 2022. They all currently have similar terms including conversion prices that generally are or are likely to be $0.0015 per share of Common Stock. All such notes matured prior to June 30, 2023. The Company has initiated discussions with all note holders regarding maturity date extensions. The Company has not received any notices of default with respect to these notes. Certain notes are accruing interest at the default interest rates even though no notices of default have been received. These notes contain, among other provisions, most favored nation provisions, reserve requirements and default interest rates.

Note Payable to SY Corporation Co., Ltd.

On June 25, 2012, the Company borrowed 465,000,000 Won (the currency of South Korea, equivalent to $399,774 United States Dollars as of that date) from and executed a secured note payable to SY Corporation Co., Ltd., (“SY Corporation”). The note accrues simple interest at the rate of 12% per annum and had a maturity date of June 25, 2013. The Company has not made any payments on the promissory note. At September 25, 2013 and subsequently, the promissory note was outstanding and in default, although SY Corporation has not issued a notice of default or a demand for repayment. Management believes that SY Corporation is in default of its obligations under its January 2012 license agreement, as amended, with the Company, but the Company has not yet issued a notice of default. The Company has in the past made several efforts towards a comprehensive resolution of the aforementioned matters involving SY Corporation. During the six-months ended June 30, 2023, there were no further communications between the Company and SY Corporation.

The promissory note is secured by collateral that represents a lien on certain patents owned by the Company, dating back to January, August and September 2007, including composition of matter patents for certain of the Company’s high impact ampakine compounds and the low impact ampakine compounds CX2007 and CX2076, and other related compounds that the Company is no longer developing and where patent rights date back to January, August and September 2007. The security interest does not extend to the Company’s patents for its AMPAkine compounds CX1739 and CX1942 or certain related method of use patents.

The note payable to SY Corporation consists of the following at June 30, 2023 and December 31, 2022:

	June 30, 2023			December 31, 2022
Principal amount of note payable	$	399,774		$	399,774
Accrued interest payable		531,251			507,330
Foreign currency transaction adjustment		(111,287	)		(73,641	)
	$	819,738		$	833,463

Interest expense with respect to this promissory note was $12,092 and $11,960 for the three-months ended June 30, 2023 and 2022, respectively and $23,921 and $23,789 for the six-months ended June 30, 2023 and 2022, respectively.

Notes Payable to Officers and Affiliates

For the three-months ended June 30, 2023 and 2022, $3,712 and $3,375 was charged to interest expense with respect to Dr. Arnold S. Lippa’s notes, respectively. For the six-months ended June 30, 2023 and 2022, $7,383 and $6,712 was charged to interest expense with respect to Dr. Lippa’s notes, respectively. At June 30, 2023, an affiliate of Dr. Lippa provided $225,000 and was issued a demand promissory note of like amount and warrants as described in more detail below. At June 30, 2023, amounts owed to Dr. Lippa and his affiliates, including notes payable, a demand promissory note, advances and accrued interest were $431,693.

In addition, Dr. Lippa periodically makes advances to the Company which are re-payable upon demand, do not accrue interest and are included in the total of notes payable to Officers.

On May 22, 2023, RespireRx issued a demand promissory note in the principal amount of $225,000 which bears interest at 10% per year to an affiliate of Dr. Arnold Lippa. In connection with the issuance of the demand promissory note and on the same date, RespireRx issued a Warrant to purchase 75,000,000 shares of the Company’s Common Stock at an exercise price of $0.0015 per share of Common Stock, exercisable at any time until the date that is five years from the initial exercise date of May 22, 2023. The Warrant had a fair value of $112,500 calculated using the Black-Scholes option pricing model utilizing an estimated one-year volatility calculated based on RespireRx’s historical Common Stock prices, the risk free rate based on U.S Treasury yield curve in effect on the issue date, the exercise period which is this case is five years, the fair value of the stock which is considered the closing price on the issue date and the exercise price. The calculated value was charged to interest expense as it is required to be amortized over the life of the note and the note is payable on demand. The Warrant also has cashless exercise provisions. Coupon interest of $2,404 for the period from May 22, 2023 to June 30, 2023 was charged to interest expense for the three-month period and six-month period ended June 30, 2023. Since neither the demand promissory note nor the Warrant existed during the three-month and six-month periods ended June 30, 2022, no such coupon interest or Warrant value interest was charged to interest expense during those periods.

On May 22, 2023, RespireRx issued a demand promissory note in the principal amount of $25,000 which bears interest at 10% per year to an affiliate that is not an officer or director of the Company. In connection with the issuance of the demand promissory note and on the same date, RespireRx issued a Warrant to purchase 8,333,333 shares of the Company’s Common Stock at an exercise price of $0.0015 per share of Common Stock, exercisable at any time until the date that is five years from the initial exercise date of May 22, 2023. The Warrant had a fair value of $12,500 calculated using the Black-Scholes option pricing model utilizing an estimated one-year volatility calculated based on RespireRx’s historical Common Stock prices, the risk free rate based on the U.S Treasury yield curve in effect on the issue date, the exercise period which is this case is five years, the fair value of the stock which is considered the closing price on the issue date and the exercise price. The calculated value was charged to interest expense as it is required to be amortized over the life of the note and the note is payable on demand. The Warrant also has cashless exercise provisions. Coupon interest of $267 for the period from May 22, 2023 to June 30, 2023, was charged to interest expense for the three-month period and six-month period ended June 30, 2023. Since neither the demand promissory note nor the Warrant existed during the three-month and six-month periods ended June 30, 2022, no such coupon interest or Warrant value was charged to interest expense during those periods.

Notes Payable to Former Officer

For the three-months ended June 30, 2023 and 2022, $5,628 and $5,116, respectively, was charged to interest expense with respect to former executive officer, Dr. James S. Manuso’s notes. For the six-months ended June 30, 2023 and 2022, $11,194 and $10,177, respectively, was charged to interest expense with respect to Dr. Manuso’s notes. At June 30, 2023, amounts owed to Dr. Manuso, associated with two notes payable and accrued interest were $236,938. At December 31, 2022, amounts owed to Dr. Manuso with respect to the same two notes were $225,744.

Other Short-Term Notes Payable

Other short-term notes payable at June 30, 2023 and December 31, 2022 consisted primarily of premium financing agreements with respect to the Company’s directors and officers liability insurance policies. At June 30, 2023, a premium financing agreement was payable in the initial amount of $96,408 (prior to payment of a deposit of $19,228 which was paid in May 2023), with interest at 8.99% per annum, in nine monthly installments of $8,900. At June 30, 2023 and December 31, 2022, the aggregate amount of the short-term notes payable was $60,483 and $15,847 respectively.