Note 5 - Notes Payable

During the three months ended March 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 $2,142,500 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 428,500 shares of the Company’s common stock. Notes in the aggregate amount of $492,500 were purchased by officers and directors of the Company. The warrants are exercisable any time prior to March 29, 2021, subject to acceleration of the expiry date in certain circumstances, at an exercise price of $5.30 per share. The Company determined the fair value of the of the warrants issued using the Black-Scholes pricing model with assumptions discussed in Note 3 and allocated the proceeds based on the relative fair value of the debt instrument and related warrants. The aggregate deferred debt discount related to the Notes was $711,310. The Company amortized $1,976 during the three months ended March 31, 2018. The Company also deferred the costs related to the Notes which totaled $31,993 and amortized $89 of that cost in the three months ended March 31, 2018.