The Company follows beneficial conversion feature guidance in ASC 470-20, which applies to convertible stock as well as convertible debt. A beneficial conversion feature is defined as a nondetachable conversion feature that is in the money at the commitment date. The beneficial conversion feature guidance requires recognition of the conversion option’s in-the-money portion, the intrinsic value of the option, in equity, with an offsetting reduction to the carrying amount of the instrument. The resulting discount is amortized as interest over the life of the instrument, if a stated maturity date exists, or to the earliest conversion date, if there is no stated maturity date. If the earliest conversion date is immediately upon issuance, the expense must be recognized at inception. When there is a subsequent change to the conversion ratio based on a future occurrence, the new conversion price may trigger the recognition of an additional beneficial conversion feature on occurrence.

During February 2018, the Company entered into two promissory notes with an investor of the Company in the amount of $28,000 and $84,000 in exchange for $25,000 and $75,000, respectively. Each of the notes have an original issue discount of $3,000 and $9,000, respectively that was amortized to interest expense over the term of the notes. The principle and interest were converted into common stock during the three months ended September 30, 2018. The Company issued 123,324 shares of Common Stock in full satisfaction of the notes.

During February 2018, the Company issued a promissory note in favor of an investor of the Company in the amount of $150,000 in exchange for $132,000 cash. The note has an original issue discount of $18,000 that is being amortized to interest expense over the term of the note. As of March 31, 2019, the loan maturity date was extended to August 8, 2019, the discount is fully amortized and total unpaid principal and interest is approximately $188,564, accruing at 12% at March 31, 2020, and is payable upon demand.

On September 21, 2018, the Company entered into a promissory note with an investor of the Company with a face value of $440,000 in exchange for $400,000 cash payment (“the Convertible Note”), the discount of the Convertible Note will be amortized over the life of the Convertible Note and have an interest rate of 10%. The Convertible Note has a twelve-month term with no payment required for the initial six months; after six months, the Company will repay the investors interest and principle in six equal installments. The principle and interest of the note is convertible into the Company’s common stock at a purchase price of $0.70 per common share after the six months. If the Company defaults on the Convertible Note, the interest is increased to 12% and at the investors’ option, the principle and interest can be converted into the Company common stock at a 20% discount to the then current market. In addition, the Company issued five-year warrants to purchase up to 200,000 common shares of the Company at a price of $0.75 per share. The cash for this Convertible Note was received prior to September 30, 2018. As of March 31, 2020, the Convertible Note is payable upon demand.

On September 21, 2018, the Company entered several promissory notes with various investors of the Company with a face value of $400,000 in exchange for $400,000 cash payment (“the Notes”), the discount of the Notes will be amortized over the life of the Note and have an interest rate of 10%. The Notes have a twelve-month term with no payment required for the initial six months; after six months, the Company will repay the investors interest and principle in six equal installments. The principle and interest of the note is convertible into the Company’s common stock at a purchase price of $0.70 per common share after the six months. If the Company defaults on the Notes, the interest is increased to 12% and at the investors’ option, the principle and interest can be converted into the Company common stock at a 20% discount to the then current market price. In addition, the Company issued five-year warrants to purchase up to 200,000 of the Company’s common shares at a price of $0.75 per share. The cash for these Notes was received prior to September 30, 2018. As of March 31, 2020, $220,000 of the Notes have been fully extinguished and the remaining $220,000 is in default and payable upon demand.

During the year ended June 30, 2019, the Company entered into several promissory notes with various investors of the Company with a face value of $960,000 in exchange for a total of $900,000 cash payments (“the Notes”). The Notes have a beneficial conversion feature valued at $839,378, which is recorded as a discount. The total discount on the Notes will be amortized over the life of the Notes and recorded as interest expense. The notes have an interest rate of 7% and have an eighteen-month term with no payment required for the initial six months; after six months, the Company will repay the investors interest and principle in twelve equal installments. The principle and interest of the note is convertible into the Company’s common stock at a purchase price of $0.75 per common share at any time after the Original Issue Date. If the Company defaults on the Notes, the interest is increased to 15% and at the investors’ option, the principle and interest can be converted into the Company common stock at a 20% discount to the then current market price. As of March 31, 2020, $533,000 of the Notes have been fully extinguished as $402,000 of debt repayment and the issuance of common stock valued at $131,000. The remaining principal of $390,125 is due August 2020. The unamortized discounts to the note as of March 31, 2020 are $196,277.

During the quarter ended March 31, 2020, the Company entered into a promissory note with a face value of $600,000 in exchange for a total of $565,000 cash payments. The total discount the Note will be amortized over the life of the Note and recorded as interest expense. The note has an interest rate of 8% and matures on December 1, 2020.

During the quarter ended March 31, 2020 the Company entered into a promissory note with a face value of $50,000. The note has an interest rate of 8% and matures on January 1, 2021.

The Company recognized $106,400 and $676,092 of interest expense for the three and nine months ended March 31, 2020, respectively and $181,643 and $356,265 of interest expense for the three and nine months ended March 31, 2019, respectively. As of March 31, 2020 and June 30, 2019, accrued interest on the above notes was $150,198 and $118,193, respectively.

Notes payable and long-term debt outstanding as of March 31, 2020 and June 30, 2019 are summarized below:

	Maturity Date	March 31, 2020		June 30, 2019
12% $150,000 Convertible Note Payable, net of unamortized discount of $0 and $14,320, respectively	Due on Demand	$	150,000	$	150,000
12% $440,000 Convertible Note Payable, net of unamortized discount of $28,589	Due on Demand		440,000		411,411
12% $220,000 Convertible Note Payable, net of unamortized discount of $14,295	Due on Demand		—		205,705
12% $220,000 Convertible Note Payable, net of unamortized discount of $14,295	Due on Demand		220,000		205,705
7% $426,667 Convertible Note Payable, net of unamortized discount of $314,401	August 15, 2020		98,025		112,266
7% $106,667 Convertible Note Payable, net of unamortized discount of $78,601	August 15, 2020		—		28,066
7% $213,333 Convertible Note Payable, net of unamortized discount of $153,786	September 20, 2020		—		59,547
7% $213,333 Convertible Note Payable, net of unamortized discount of $153,786	September 20, 2020		97,782		59,547
5% Note Payable	Due on Demand		—		600,000
8% Note Payable	December 1, 2020		565,000		—
8% Note Payable	January 1, 2021		50,000		—
5% Note Payable	Due on Demand (1)		350,000		350,000
Total notes payable			1,970,807		2,182,247
Less current portion of notes payable			1,970,807		2,182,247
Notes payable, Non-current portion		$	—	$	—

⁽¹⁾ The Company entered two promissory notes with an investor of the Company in the amount of $350,000. The investor had agreed to convert the loan into 437,500 shares of common stock in 2018. The Company has not issued these shares to the investor and booked the notes as a short-term loan. This loan is considered payable upon demand.