Note 5 - Notes Payable

During the six months ended June 30, 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 of the warrants issued using the Black-Scholes pricing model using the following assumptions for the three months ended June 30, 2018; expected life of 3 years; risk free interest rate of 2.51%; expected volatility of 69%; expected dividend yield of 0% and a forfeiture rate of 0% The Company determined the fair value of the of the warrants issued using the Black-Scholes pricing model with the following assumptions for the six months ended June 30, 2018; expected life of 3 years; risk free interest rate of 2.44%; expected volatility of 69%; expected dividend yield of 0% and a forfeiture rate of 0%. The aggregate deferred debt discount related to the Notes was $1,253,390. The Company amortized $100,953 of the deferred debt discount during the six months ended June 30, 2018. The Company also deferred the costs related to the Notes which totaled $57,288 and amortized $4,290 of that amount in the six months ended June 30, 2018.