| Notes Payable | 4. Notes Payable Convertible Notes Payable Q3 2020 Convertible
Notes Convertible Note with
EMA Financial, LLC On July 30, 2020, RespireRx
and EMA Financial, LLC (“EMA”) entered into a Securities Purchase Agreement (the “EMA SPA”) by which EMA
provided a sum of $68,250 (the “EMA Consideration”) to RespireRx, in return for a fixed rate convertible note (the
“EMA Note”) with a face amount of $75,000, and a common stock purchase warrant (the “EMA Warrant”) for
3,750,000 shares of Common Stock. The net proceeds received by RespireRx on August 4, 2020 were $63,750 after payment of $3,500
in EMA’s legal fees and the withholding by EMA of $1,000 in diligence fees. The EMA Note obligates
RespireRx to pay by October 30, 2021 (the “EMA Maturity Date”) a principal amount of $75,000 together with interest
at a rate equal to 10% per annum, which principal exceeds the EMA Consideration by the amount of an original issue discount of
$6,750. Any amount of principal or interest that is not paid by the EMA Maturity Date would bear interest at the rate of 24% from
the EMA Maturity Date to the date such amount is paid. EMA has the right, in its
discretion, at any time, to convert any outstanding and unpaid amount of the EMA Note into shares of Common Stock, provided that
such conversion would not result in EMA beneficially owning more than 4.99% of RespireRx’s then outstanding Common Stock.
In the absence of an event of default, EMA may convert at a per share conversion price equal to $0.02, subject to a retroactive
downward adjustment if the lowest traded price on each of the three consecutive trading days following such conversion is lower
than $0.02. Upon an event of default, the conversion price is adjusted downward based on a discount to market with respect to subsequent
financings or a percentage of the lowest traded price during the twenty one day period prior to the conversion, if lower than $0.02.
Upon such conversion, all rights with respect to the portion of the EMA Note being so converted terminate, except for the right
to receive Common Stock or other securities, cash or other assets as provided in the EMA Note due upon such conversion. RespireRx may, with prior
written notice to EMA, prepay the outstanding principal amount under the EMA Note during the initial 180 day period by making a
payment to EMA of an amount in cash equal to a certain percentage of the outstanding principal, interest, default interest and
other amounts owed. Such percentage varies from 110% to 115% depending on the period in which the prepayment occurs, as set forth
in the EMA Note. If, prior to the repayment
or conversion of the EMA Note, RespireRx consummates a registered, qualified or unregistered primary offering of its securities
for capital raising purposes with aggregate net proceeds in excess of $2,500,000, EMA will have the right, in its discretion, to
demand repayment in full of any outstanding principal, interest (including default interest) under the EMA Note as of the closing
date of such offering. The EMA SPA includes, among
other things: (1) an automatic adjustment to the terms of the EMA SPA and related documents to the terms of a future financing
if those terms are more beneficial to an investor than the terms of the EMA SPA and related documents are to EMA, subject to limited
exceptions; and (2) certain registration rights. In addition, the EMA Note prohibits RespireRx from selling or otherwise disposing
of a significant portion of its assets outside the ordinary course of business or in connection with a merger or consolidation
or sale of all or substantially all of RespireRx’s assets where the surviving or successor entity does not assume RespireRx’s
obligations under the EMA SPA. Further, any subsidiary to which RespireRx transfers a material amount of assets must guarantee
certain obligations of RespireRx under the EMA Note. The EMA Warrant is a common
stock purchase warrant to purchase 3,750,000 shares of Common Stock, for value received in connection with the issuance of the
EMA Note, from the date of issuance of the EMA Warrant until September 30, 2023, at an exercise price of $0.007 (subject to adjustment
as provided therein) per share of Common Stock. The EMA Note and the shares
of Common Stock issuable upon conversion thereof are offered and sold to EMA in reliance upon specific exemptions from the registration
requirements of United States federal and state securities laws, which include Section 4(a)(2) of the Securities Act of 1933, as
amended (the “Securities Act”), and Rule 506 of Regulation D promulgated thereunder. Pursuant to these exemptions,
EMA represented to the Company under the EMA SPA, among other representations, that it was an “accredited investor”
as that term is defined in Rule 501(a) of Regulation D under the Securities Act. The Company determined
that there were no embedded derivatives to be identified, bifurcated and valued in connection with this financing. The outstanding amounts
of the EMA Note consists of the following at September 30, 2020 and December 31, 2019:
September 30, 2020
December 31, 2019
Principal amount of notes payable $ 75,000 $ -
Unamortized portion of note discounts (24,009 )
Accrued interest payable 1,274 -
$ 52,265 $ - Convertible Note and
Equity Purchase Agreement with White Lion Capital, LLC On July 28, 2020, RespireRx
issued a convertible note, as amended (“Commitment Note”) to White Lion Capital, LLC (“White Lion”) pursuant
to, and to induce White Lion to enter into an equity purchase agreement dated July 28, 2020 (“White Lion EPA”). See
Note 8. Commitments and Contingencies - Entry into Equity Purchase Agreement The Commitment Note obligates
RespireRx to pay by July 28, 2021 a principal amount of $40,000, together with a guaranteed interest payment of $3,200 representing
an 8% per annum interest rate applied regardless of any payments or prepayments other than payments made by conversion of the Commitment
Note. Upon an event of default, any amount of outstanding principal or interest would bear interest at the lower of 18% or the
highest rate permitted by law. White Lion has the right,
at any time after the first 180 days after execution of the White Lion EPA, to convert any outstanding and unpaid amount (including
accrued interest and other fees) into shares of Common Stock, provided that such conversion would not result in White Lion beneficially
owning more than 9.99% of the Company’s then outstanding Common Stock. Unless an event of default has occurred, White Lion
may convert at a per share conversion price equal to $0.02. Upon such conversion, all rights with respect to the portion of the
Commitment Note being so converted terminate, except for the right to receive Common Stock. White Lion also has the right, at any
time the Commitment Note is outstanding, to apply any outstanding principal or interest as consideration for any equity, equity-linked
and/or debt securities offered by the Company in any public offering or private placement, subject to the terms of the Commitment
Note. RespireRx may, with prior
written notice to White Lion, prepay the entire outstanding principal amount under the Commitment Note at any time by making a
payment to White Lion of an amount in cash equal to 110% of the outstanding principal, guaranteed interest amount, and any default
interest or other amounts owed. RespireRx determined
that there were no embedded derivatives to be identified, bifurcated and valued in connection with this financing. The outstanding amounts
of the White Lion Note consist of the following at September 30, 2020 and December 31, 2019:
September 30, 2020
December 31, 2019
Principal amount of notes payable $ 40,000 $ -
Accrued interest payable 561 -
$ 40,561 $ - Convertible Note with
FirstFire Global Opportunities Fund LLC On July 2, 2020, RespireRx
and FirstFire Global Opportunities Fund LLC (“FirstFire”) entered into a Securities Purchase Agreement (the “FirstFire
SPA”) pursuant to which FirstFire provided a sum of $125,000 (the “FirstFire Consideration”) to RespireRx, in
return for a convertible promissory note (the “FirstFire Note”) with a face amount of $137,500 (which difference in
value as compared to the FirstFire Consideration is due to an original issue discount of $12,500), a common stock purchase warrant
for 6,875,000 shares of the Company’s common stock (the “FirstFire Warrant”), and the Confession of Judgment
(as defined below), among other agreements and obligations. The net proceeds of the First Fire Consideration, which were received
by RespireRx on July 6, 2020, equal $121,000 after payment of $4,000 in FirstFire’s legal fees. Under the terms of the
FirstFire SPA and the FirstFire Note, FirstFire paid the FirstFire Consideration at closing. The FirstFire Note obligates RespireRx
to pay interest at a rate of 10% per annum on any unpaid principal beginning on July 2, 2020, and to make five monthly amortization
payments in the amount of $30,250 each, with the first such payment due on December 2, 2020, and the final such payment, along
with any unpaid principal and any accrued and unpaid interest and other fees, due April 2, 2021 (the “FirstFire Note Maturity
Date”). Any amount of principal or interest that is not paid when due bears interest at the rate of the lesser of 24% and
the maximum amount permitted by law, from the due date to the date such amount is paid. FirstFire has the right,
at any time, to convert any outstanding and unpaid amount of the FirstFire Note into shares of RespireRx’s Common Stock or
securities convertible into RespireRx’s common stock, provided that such conversion would not result in FirstFire beneficially
owning more than 4.99% of RespireRx’s then outstanding shares of Common Stock. Subject to certain limitations and adjustments
as described in the FirstFire Note, FirstFire may convert at a per share conversion price equal to $0.02 (the “FirstFire
Fixed Conversion Price”), provided that upon any event of default, the conversion price will equal the lower of (i) the FirstFire
Fixed Conversion Price, (ii) discount to market based upon subsequent financings with other investors, or (iii) 60% multiplied
by the lowest traded price of Common Stock during the twenty-one consecutive trading day period immediately preceding the date
of such conversion. Upon such conversion, all rights with respect to the portion of the FirstFire Note being so converted terminate,
except for the right to receive Common Stock or other securities, cash or other assets as provided in the FirstFire Note due upon
such conversion. RespireRx may, with prior
written notice to FirstFire, prepay the outstanding principal amount under the FirstFire Note during the initial 180 day period
after the execution of the FirstFire SPA by making a payment to FirstFire of an amount in cash equal to a certain percentage of
the outstanding principal, interest, default interest and other amounts owed. Such percentage varies from 105% to 115% depending
on the period in which the prepayment occurs. The FirstFire SPA provides
FirstFire with certain participation rights in any subsequent offering of debt or equity. Under the FirstFire SPA, RespireRx may
not enter into an offering of its securities with terms that would benefit an investor more than FirstFire is benefited under the
FirstFire SPA and the agreements ancillary thereto, unless RespireRx offers FirstFire those same terms. The FirstFire SPA also
grants FirstFire certain registration rights. The FirstFire Warrant is
a warrant to purchase 6,875,000 shares of Common Stock, for value received in connection with the issuance of the FirstFire Note,
from the date of issuance of the FirstFire Warrant until September 30, 2023, at an exercise price of $0.007 (subject to adjustment
as provided therein) per share of common stock. Additionally, RespireRx
provided a confession of judgment (the “Confession of Judgment”) in favor of FirstFire for the amount of the FirstFire
Note plus fees and costs, to be filed pursuant to the terms and conditions of the FirstFire SPA and the FirstFire Note. The FirstFire Note and
the shares of Common Stock issuable upon conversion thereof are offered and sold to FirstFire in reliance upon specific exemptions
from the registration requirements of United States federal and state securities laws, which include Section 4(a)(2) of the Securities
Act, and Rule 506(b) promulgated by the SEC under the Securities Act. Pursuant to these exemptions, FirstFire represented to RespireRx
under the FirstFire SPA, among other representations, that it was an “accredited investor” as that term is defined
in Rule 501(a) of Regulation D under the Securities Act. The Company determined
that there were no embedded derivatives to be identified, bifurcated and valued in connection with this financing. The outstanding amounts
of the FirstFire Note consist of the following at September 30, 2020 and December 31, 2019:
September 30, 2020
December 31, 2019
Principal amount of notes payable $ 137,500 $ -
Unamortized portion of note discounts (29,831 )
Accrued interest payable 3,390 -
$ 111,059 $ - Q2 2020 Convertible
Notes RespireRx and Power Up
Lending Group Ltd. (“Power Up”) entered into two securities purchase agreements, dated as of April 15, 2020 and June
7, 2020 (each, a “Power Up Agreement”), by which Power Up loaned $53,000 and $43,000, respectively, to RespireRx in
return for two convertible promissory notes (the “April 2020 Note” and the “June 2020 Note” respectively),
a limited guaranty associated with the April 2020 Note, and the delivery into escrow of a confession of judgment in favor of Power
Up for the amount of the April 2020 Note plus fees and costs to be filed by Power Up upon the occurrence of an Event of Default
(as defined in the April 2020 Note) and other transaction-related documents associated with both the April 2020 Note and the June
2020 Note. The proceeds of the loans, which equal $90,000 after payment of $5,000 in legal fees and $1,000 in due diligence fees,
were used for general corporate purposes. The April 2020 Note was
repaid by conversion in October 2020 (See Note 9. Subsequent Events). The June 2020 Note will be payable on June 7, 2021, (the
“June 2020 Note Maturity Date”), and bears interest at a rate equal to 12% per annum, with any amount of principal
or interest which is not paid when due bearing interest at the rate of 22% per annum. Power Up has the right,
at any time during the period beginning on the date that is 180 days following the date of the June 2020 Note and ending on the
later of (i) the applicable June 2020 Note Maturity Date and (ii) the date of payment of the Default Amount (as defined in the
notes), to convert any outstanding and unpaid amount of the June 2020 Note into shares of RespireRx’s common stock or securities
convertible into RespireRx’s common stock (the “June 2020 Note Conversion Shares”), provided that such conversion
would not result in Power Up beneficially owning more than 4.99% of RespireRx’s common stock. Subject to certain limitations
and adjustments as described in the June 2020 Note, Power Up may convert at a per share conversion price equal to 61% of the lowest
trading price of the common stock as reported by the exchange on which RespireRx’s shares are traded, for the twenty trading
days prior to, but excluding, the day upon which a notice of conversion is received by RespireRx. Upon the conversion of all amounts
due under the June 2020 Note, would be deemed repaid and terminated. The April 2020 Note was repaid and terminated in this manner
in October 2020. See Note 9. Subsequent Events. RespireRx may prepay the
outstanding principal amount under the June 2020 Note by paying a certain percentage of the sum of the outstanding principal, interest,
default interest and other amounts owed. Such percentage varies from 120% to 145% depending on the period in which the prepayment
occurs, as set forth in the June 2020 Note. During the period in which the June 2020 Note is outstanding, subject to certain limited
exceptions, RespireRx must notify Power Up in advance of closing of any financing transactions with third party investors. At Power
Up’s discretion, RespireRx must amend and restate each note, including its conversion terms, and the June 2020 Note Conversion
Shares to be identical to the instruments evidencing such financing transaction. Both the April 2020 Note
and the June 2020 Note and the shares of common stock issuable upon conversion thereof were offered and sold to the Lender in reliance
upon specific exemptions from the registration requirements of United States federal and state securities laws, which include Section
4(a)(2) of the Securities Act. Pursuant to these exemptions, Power Up represented to RespireRx under each Power Up Agreement, among
other representations, that it was an “accredited investor” as that term is defined in Rule 501(a) of Regulation D
under the Securities Act. The Company determined
that there were no embedded derivatives to be identified, bifurcated and valued in connection with this financing. The outstanding amounts
of the April 2020 Note and June 2020 Note consist of the following at September 30, 2020 and December 31, 2019:
September 30, 2020
December 31, 2019
Principal amount of notes payable $ 96,000 $ -
Unamortized portion of note discounts (58,057 )
Accrued interest payable 4,553 -
$ 42,496 $ - On October 22, 23 and
26, 2020, Power Up converted the outstanding principal amount and all accrued and unpaid interest related to the April 2020 Note
into 28,804,407 shares of Common Stock and as of October 26, 2020 the April 2020 Note is deemed repaid and terminated. See Note
9. Subsequent Events. 2019 Convertible Notes On November 4, 2019,
October 22, 2019, August 19, 2019, May 17, 2019 and April 24, 2019, the Company issued a series of convertible notes (“2019
Convertible Notes”), all similar in nature, all subject to debt issuance costs (“DIC”) and original issue discount
(“OID”) and beneficial conversion (“BCF”) features and some subject to the issuance of warrants (“NW”)
and/or commitment shares (“CS”) and placement agent fees. Two of the notes had maturity dates nine months after issuance
and three were for one year. One note was a master note agreement in the amount of $150,000, but with an initial drawdown of $50,000.
The Company evaluated all of the terms of the 2019 Convertible Notes and determined that, in accordance with ASC 815, there were
no derivatives to be bifurcated or separately valued. Each of the April, 24, 2019, May 17, 2020, August 19, 2019, October 22, 2019
and November 4, 2019 Convertible Notes was satisfied in full by the lenders electing to convert the outstanding balances to Common
Stock, except for $2,747 of accrued interest that remains outstanding under the May 17, 2019 Convertible Note.
Inception date Maturity date Original principal amount Interest rate Original aggregate DIC, OID, BCF, NW and CS Cumulative amortization of DIC, OID, BCF, NW and CS
Principal remaining at September 30, 2020 Accrued Interest at September 30, 2020 Balance sheet carrying amount at September 30, 2020 inclusive of accrued interest
May 17, 2019 May 17, 2020, extended to November 17, 2020 $ 50,000 10 % $ 50,000 $ 50,000 $ - $ 2,747 $ 2,747
Total $ 50,000 $ 50,000 $ 50,000 $ - $ 2,747 $ 2,747 2018 Q4 and 2019 Q1
Notes and Original Convertible Notes On December 6, 2018,
December 7, 2018 and December 31, 2018 the Company issued convertible notes (each a “2018 Q4 Note”) and on January
2, 2019, February 27, 2019, March 6, 2019 and March 14, 2019, the Company issued additional convertible notes (each a “2019
Q1 Note”, respectively and collectively with the “2018 Q4, the “2018 Q4 and 2019 Q1 Notes”) bearing interest
at 10% per year. All of the 2018 Q4 and 2019 Q1 Notes matured on either February 28, 2019 or April 30, 2019. The original aggregate
principal amount was $190,000. None of the 2018 Q4 and 2019 Q1 Notes were repaid at maturity. The 2018 Q4 and 2019 Q1 Note investors
also received an aggregate of 190,000 common stock purchase warrants. The warrants were valued using the Black Scholes option pricing
model calculated on the date of each grant and had an aggregate value of $146,805. Total value received by the investors was $336,805,
the sum of the face value of the convertible note and the value of the warrant. Therefore, the Company recorded a debt discount
associated with the warrant issuance of $82,159 and an initial value of the convertible notes of $107,841 using the relative fair
value method. All debt discounts were fully amortized by the original maturity dates. On March 21, 2020, all except one of the
2018 Q4 and 2019 Q1 Note holders exchanged the outstanding principal amount and accrued interest for shares of common stock. The
exchange price was $0.015 per share of common stock. The closing price on March 20, 2020, the last trading day before the closing
of the exchange agreements which took place on a Saturday, was $0.034 per share of common stock. An aggregate of $155,000 of principal
and $17,911 of accrued interest was exchanged for 11,527,407 shares of common stock. The Company recorded a loss on the extinguishment
of the exchanged 2018 Q4 Notes and 2019 Q1 Notes of $219,021. As of September 30, 2020, there remains one outstanding 2018 Q4 Note
and one outstanding 2019 Q1 Note, both held by the same single investor, with an aggregate principal amount of $35,000 and aggregate
accrued interest of $6,215 as of September 30, 2020. The 2019 Convertible Notes discussed above, which the Company does not consider
to have arisen from one or more offerings, may be interpreted in such a way that the remaining 2018 Q4 Note and 2019 Q1 Note holders
had the right to convert or exchange into such notes. However, no holder of the Q4 2018 and 2019 Notes has requested such a conversion
or exchange. The Company does not believe that an offering occurred as of September 30, 2020 or as of the date of the issuance
of these financial statements. Therefore, the number of shares of common stock (or preferred stock) into which the remaining 2018
Q4 Note and the remaining 2019 Q1 Note may convert is not determinable and the Company has not accounted for any additional consideration.
The warrants to purchase 190,000 shares of common stock issued in connection with the sale of the 2018 Q4 and 2019 Q1 Notes are
exercisable at a fixed price of $1.50 per share of common stock, provide no right to receive a cash payment, and included no reset
rights or other protections based on subsequent equity transactions, equity-linked transactions or other events. The warrants issued
to the Q4 2018 and Q1 2019 Note holders expire on December 30, 2023. The Company determined that there were no embedded derivatives
to be identified, bifurcated and valued in connection with this financing. The 2018 Q4 Notes and
2019 Q1 Notes consist of the following at September 30, 2020 and December 31, 2019:
September 30, 2020
December 31, 2019
Principal amount of notes payable $ 35,000 $ 190,000
Accrued interest payable 6,215 17,976
$ 41,215 $ 207,976 Other convertible notes
were also sold to investors in 2014 and 2015 (the “Original Convertible Notes), which aggregated a total of $579,500, and
had a fixed interest rate of 10% per annum. The Original Convertible Notes have no reset rights or other protections based on subsequent
equity transactions, equity-linked transactions or other events. The warrants to purchase shares of common stock issued in connection
with the sale of the Original Convertible Notes have either been exchanged for common stock or expired. On March 21, 2020, the
holder of one of the Original Convertible Notes exchanged $50,000 of principal and $32,875 of accrued interest for 5,525,017 shares
of the Company’s common stock. The exchange price was $0.015 per share of common stock. The closing price on March 20, 2020,
the last trading day before the closing of the exchange agreements, was $0.034 per share of common stock. The Company recorded
a loss on the extinguishment of the exchanged Original Convertible Note of $104,975. The remaining outstanding
Original Convertible Notes (including that for which a default notice has been received) consist of the following at September
30, 2020 and December 31, 2019:
September 30, 2020
December 31, 2019
Principal amount of notes payable $ 75,000 $ 125,000
Accrued interest payable 60,983 82,060
$ 135,983 $ 207,060 As of September 30, 2020,
principal and accrued interest on the Original Convertible Note that is subject to a default notice accrues annual interest at
12% instead of 10%, totaled $47,526, of which $22,526 was accrued interest. As of December 31, 2019, principal and accrued interest
on Original Convertible Notes subject to default notices totaled $43,666 of which $18,666 was accrued interest. As of September 30, 2020
all of the outstanding Original Convertible Notes, inclusive of accrued interest, were convertible into an aggregate of 11,955
shares of the Company’s common stock. Such Original Convertible Notes will continue to accrue interest until exchanged, paid
or otherwise discharged. There can be no assurance that any of the additional holders of the remaining Original Convertible Notes
will exchange their Original Convertible Notes. 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 approximately $400,000 United States Dollars as of that date)
from and executed a secured note payable to SY Corporation Co., Ltd., formerly known as Samyang Optics Co. Ltd. (“SY Corporation”),
an approximately 20% common stockholder of the Company at that time. SY Corporation was a significant stockholder and a related
party at the time of the transaction but has not been a significant stockholder or related party of the Company subsequent to December
31, 2014. 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 June 30, 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 nine months ended September 30, 2020, 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, 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. The security interest does not extend to the Company’s patents for its ampakine compounds CX1739 and CX1942,
or to the patent for the use of ampakine compounds for the treatment of respiratory depression. Note payable to SY Corporation
consists of the following at September 30, 2020 and December 31, 2019:
September 30, 2020
December 31, 2019
Principal amount of note payable $ 399,774 $ 399,774
Accrued interest payable 399,293 363,280
Foreign currency transaction adjustment (3,969 ) 3,182
$ 795,098 $ 766,236 Interest expense with respect
to this promissory note was $12,092 and $12,092 for the three months and was $36,013 and $35,881 for the nine months ended September
30, 2020 and 2019, respectively. Notes Payable to Officers and Former
Officers For the three months ended
September 30, 2020 and 2019, $2,848 and $2,589 and for the nine months ended September 30, 2020, $8,481 and $7,683 was charged
to interest expense with respect to Dr. Arnold S. Lippa’s notes, respectively. Other Short-Term Notes Payable Other short-term notes
payable at September 30, 2020 and December 31, 2019 consisted of premium financing agreements with respect to various insurance
policies. At September 30, 2020, a premium financing agreement was payable in the initial amount of $70,762, with interest at11%
per annum, in nine monthly installments of $8,256 and which resulted in a remaining balance of $24,321 at September 30, 2020. In
addition, there is a balance of $6,899 of short-term financing of office and clinical trials insurance premiums that includes a
prior period premium financing of $2,317. At September 30, 2020 and December 31, 2019, the aggregate amount of the short-term notes
payable was $31,219 and $4,635 respectively. |
