Note

Debt Obligations

The following table summarizes our debt obligations outstanding as of

December 31, 2019

and as of

March 31, 2020.

	December 31, 2019		March 31, 2020
C urrent liabilities:
Note payable, matures on demand 60 days’ notice (or March 8, 2023)	$	50	$	50
Line of credit, matures September 1, 2019 or later (on 30-day demand)		50		50
Note payable issued by Clyra Medical to Scion, matures June 17, 2020 Clyra note payable (See Note 8)		1,007		1,007
Total notes payable and line of credit	$	1,107	$	1,107
Convertible notes payable:
Convertible note, matures April 7, 2020		270		—
Convertible note, matures June 20, 2020 (1)		25		25
Convertible 12-month OID notes, mature beginning June 2020 (1)		3,112		2,948
Convertible notes, mature August 12 and 16, 2020		550		550
Total convertible notes payable		3,957		3,523
Total current liabilities	$	5,064	$	4,630

L ong-term liabilities :
Convertible note payable, matures August 9, 2021		600		600
Convertible notes payable, mature April 20, 2021 (1)		100		100
Total long-term liabilities	$	700	$	700
Total	$	5,764	$	5,330

(

)

These notes are convertible at our option at maturity.

For the

three

months ended

March 31, 2019

and

2020

we recorded

$985,000

and

$757,000

of interest expense related to the amortization of discounts on convertible notes payable, coupon interest from our convertible notes and line of credit.

The following discussion includes debt instruments to which amendments were made or included other activity that management deemed appropriate to disclose. Each of the debt instruments contained in the above table are disclosed more fully in the financial statements contained in the Company’s Annual Report filed

March 31, 2020,

as amended.

Convertible Note, matures

October 7, 2019 (

Vista Capital)

January 7, 2019,

Vista Capital Investments LLC (“Vista Capital”) invested

$300,000

and in exchange we issued a convertible promissory note (the “Vista

2019

Note”) in the principal amount of

$330,000.

Originally set to mature

nine

months from the date of issuance, the maturity date was extended multiple times. The note earned a

one

-time interest charge of

12%,

which was recorded as a discount on convertible notes and was amortized over the term of the note. The note allowed conversion of the note into our common stock at a price equal to

65%

of the lowest closing bid price of the Company’s common stock during the

consecutive trading days immediately preceding the conversion date. The intrinsic value of the beneficial conversion feature resulted in a fair value totaling

$300,000,

and is recorded as a discount on convertible notes on our balance sheet. This discount will be amortized over the term of the note as interest expense, all of which was recorded in

2019.

During the

three

months ended

March 31, 2020,

Vista Capital elected to convert the remaining balance of

$270,000

of the outstanding principal and interest due on the note, and we issued

2,417,059

shares of our common stock.

Convertible Twelve-month OID notes

From

June 7, 2019

through

September 30, 2019,

we received

$2,235,000

and issued convertible promissory notes (each, a

“12

-Month OID Note”) in the aggregate principal amount of

$2,794,000,

with a

25%

original issue discount, to

accredited investors. The original issuance discount totaled

$559,000

and is recorded as a discount on convertible notes payable on our balance sheet. The intrinsic value of the beneficial conversion features resulted in an aggregate fair value of

$2,235,000,

and is recorded as a discount on convertible notes on our balance sheet. The discounts will be amortized and recorded to interest expense over the term of the notes. These notes mature

twelve

months from the date of issuance.

During the

three

months

July 1, 2019

through

September 30, 2019,

in exchange for

$305,000

of convertible note payables that were coming due, we issued an additional

$381,000

convertible promissory notes (each, a

“12

-Month OID Note), with a

25%

original issue discount. The original issue discount totaled

$76,000

and is recorded as a discount on convertible notes payable on our balance sheet. The intrinsic value of the beneficial conversion features resulted in an aggregate fair value of

$381,000

and is recorded as debt extinguishment expense on our statement of operations. The discount will be amortized and recorded to interest expense over the term of the notes. These notes mature

twelve

months from the date of issuance.

Each Twelve-month OID Note is convertible by the investor at any time at

$0.17

per share. This initial conversion price shall be adjusted downward in the event the Company subsequently issues a convertible promissory note at a lower conversion rate (with this lower conversion rate becoming the adjusted conversion rate under the note), or conducts an equity offering at a per-share price less than

$0.17.

The notes earn interest at a rate of

five

percent (

) per annum, due at maturity. The Company

may

prepay the notes only upon

days’ notice to the investor, during which time the investor

may

exercise his/her right to convert the note to stock. The Company is obligated to prepay the notes in the event it receives at least

$3.5

million gross proceeds in a financing transaction. At maturity, the Company

may

redeem the notes through the issuance of common stock at a conversion price equal to the lower of the “conversion price” (initially

$0.17,

may

be adjusted), and

70%

of the lowest daily volume weighted average price of the Company’s common stock during the

trading days preceding the conversion date.

During the

three

months ended

March 31, 2020,

noteholders elected to convert

$165,000

of the outstanding principal of

-Month OID Notes and we issued

970,590

shares of our common stock. As of

March 31, 2020,

the outstanding balance on the

-Month OID Notes was

$2,948,000.