At June 30, 2019 and December 31, 2018, convertible loans consisted of the following:

	June 30,		December 31,
	2019		2018
Promissory notes – Issued in fiscal year 2018, with variable conversion features	$	-	$	221,901
Promissory notes – Issued in fiscal year 2019, with variable conversion features		1,166,000		-
Total convertible notes payable		1,166,000		221,901
Less: Unamortized debt discount		(655,755)		(158,696)
Total convertible notes		510,245		63,205

Less: current portion of convertible notes		508,876		63,205
Long-term convertible notes	$	1,369	$	-

During the six months ended June 30, 2019 and 2018, the Company recognized amortization of discount, included in interest expense, of $523,941 and $0, respectively.

During the six months ended June 30, 2019 and 2018, the Company repaid notes of $221,901 and $0 and accrued interest including the prepayment penalty of $120,006 and $0, respectively.

During the six months ended June 30, 2019, the Company converted notes with principal amounts of $5,000 into 76,335 shares of common stock. The corresponding derivative liability at the date of conversion of $181,326 was settled through additional paid in capital.

During the year ended December 31, 2018, the Company issued a total of $213,750 in notes with the following terms:

· Conversion prices are typically based on the discounted (50% discount) lowest trading prices of the Company’s shares during various periods prior to conversion.

Certain notes allow the Company to redeem the notes at rates ranging from 130% to 150% depending on the redemption date provided that no redemption is allowed after the 180th day. Likewise, the notes include financing costs totaling $12,250 and the Company received cash of $201,500.

During the six months ended June 30, 2019, the Company issued a total of $1,171,000 in notes with the following terms:

· Convertible at the option of the holders at issuance or 180 days from issuance.

· Conversion prices are typically based on the discounted (39% or 50% discount) lowest trading prices of the Company’s shares during various periods prior to conversion.

The convertible notes were also provided with a total of 376,931 common shares and warrant to purchase up to 92,000 shares of common stock at exercise price of $2.5 per share for 3 years.

Certain notes allow the Company to redeem the notes at rates ranging from 117% to 150% depending on the redemption date provided that no redemption is allowed after the 180th day. Likewise, the notes include financing costs totaling $122,500 and the Company received cash of $1,048,500.

The Company determined that the conversion option in the note and the exercise feature of the warrants met the definition of a liability in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity’s Own Stock. The Company will bifurcate the embedded conversion option in the note once the note becomes convertible and account for it as a derivative liability.

The Company valued the conversion features using the Black Scholes valuation model. The fair value of the derivative liability for all the note that became convertible for the year ended December 31, 2018 amounted to $896,593. $201,500 of the value assigned to the derivative liability was recognized as a debt discount to the notes while the balance of $695,093 was recognized as a “day 1” derivative loss.

The Company valued the conversion features of convertible notes and warrant using the Black Scholes valuation model. The fair value of the derivative liability for all the note and warrant that became convertible for the six months ended June 30, 2019 amounted to $2,583,990. $403,800 of the value assigned to the derivative liability was recognized as a debt discount to the notes while the balance of $2,180,190 was recognized as a “day 1” derivative loss.

	Warrants Outstanding
		Weighted Average
	Shares	Exercise Price

Outstanding, December 31, 2018	-	$	-
Granted	92,000		2.50
Exercised	-		-
Forfeited/canceled	-		-
Outstanding, June 30, 2019	92,000	$	2.50

The following table summarizes information relating to outstanding and exercisable warrants as of June 30, 2019:

Warrants Outstanding				Warrants Exercisable
Number of Shares	Weighted Average Remaining Contractual life (in years)	Weighted Average Exercise Price		Number of Shares	Weighted Average Exercise Price
92,000	3.40	$	2.50	92,000	$	2.50