Note 7 - Notes Payable

During the year ended December 31, 2018, the Company entered into Note and Warrant Purchase Agreements (the “Purchase Agreements”) with certain accredited investors (the “Investors”) pursuant to which the Company issued to the Investors $3,902,500 aggregate principal amount of its 8% Unsecured Promissory Notes due in March 2021 (the “Notes”). The Notes were issued together with warrants to purchase up to an aggregate of 780,500 shares of the Company’s common stock. Notes in the aggregate amount of $532,500 were purchased by officers and directors of the Company. The warrants are exercisable any time prior to March 29, 2021. The Company determined the fair value of the warrants issued using the Black-Scholes pricing model with the following assumptions:

The fair value of the warrants was $1,253,390. The Company also incurred costs of $57,923 to issue the debt, which offset the carrying value of the Notes. During the twelve months ended December 31, 2018, the Company amortized $325,150 of the debt discount and issuance costs leaving a net Notes payable balance at December 31, 2018 of $2,916,337.

In 2013, the Company was awarded a grant from the Alzheimer’s Drug Discovery Foundation consisting of two promissory notes totaling $205,260. The notes had original terms of four years and were paid in full in 2017.