| STOCKHOLDERS' EQUITY (DEFICIT) | NOTE
11 – STOCKHOLDERS’ EQUITY (DEFICIT) Common
Stock On
January 10, 2018, the Company amended its Articles of Incorporation to increase the number of authorized shares of common stock
from 200,000,000 shares to 500,000,000 shares. On
August 23, 2017, the Investor converted $35,000 of the principal amount of the Debenture into an aggregate of 2,808 shares of
common stock, which included 17 shares for conversion of principal (at $2,031.25 per share) and 2,790 shares for premiums. On
April 20, 2018, the Investor was issued 5,679 shares of common stock as a result of true-ups in connection with the August 23,
2017 conversion of the Debenture. On
October 4, 2017, the Company entered into an agreement with a digital marketing advisor pursuant to which the advisor agreed to
create original content with the goal of increasing public awareness about the Company and the Company agreed to pay the advisor
(a) $20,000 per month beginning in October 2017 and ending on February 28, 2018, (b) $50,000 per month thereafter through October
4, 2018, the end of the term of the agreement, and (c) 6,000 shares of restricted common stock, with 4,000 shares payable within
15 days of the parties’ entry into the agreement and the remainder due on May 1, 2018. As of December 31, 2018, the remaining
shares were issued and the obligation was settled in full. As
of March 31, 2018, the 408,508 outstanding shares of Series B Preferred Stock had accrued an aggregate of $606,764 in dividends.
The Company paid the dividends by way of the issuance of an aggregate of 70 shares of its common stock to the preferred shareholders
in May 2018, pursuant to the terms of the designation (which provides that the Shares shall be based on a value of $2,187.50 per
share). The beneficial owners of the Series B Preferred Stock as of March 31, 2018, were Richard N. Azar, II, the Company’s
former Chief Executive Officer and former director, and Alan Dreeben, the Company’s former director. On
October 7, 2016, the Investor exercised the First Warrant in full and was due 2,215 shares of common stock upon exercise thereof
and an additional 4,068 shares of common stock in consideration for the conversion premium due thereon. A total of 1,296 shares
were issued to the Investor on October 7, 2016, with the remaining shares being held in abeyance until such time as it would not
result in the Investor exceeding its beneficial ownership limitation (4.99% of the Company’s outstanding common stock).
The Company received gross proceeds of $4,500,000 from the exercise of the First Warrant and paid placement agent fees of $427,500
for services rendered in connection with the First Warrant. Pursuant to the terms of the First Warrant, the number of shares due
in consideration for the conversion premium increases as the annual rate of return under the First Warrant increases, including
by 10% upon the occurrence of certain triggering events (which had occurred by the October 7, 2016 date of exercise), to 17% per
annum upon the exercise of the First Warrant. Additionally, as the conversion rate for the conversion premium is currently 85%
of the lowest daily volume weighted average price during the measuring period, less $0.10 per share of common stock not to exceed
85% of the lowest sales prices on the last day of such period less $0.10 per share (which discounts are not affected by the Company’s
stock splits), the number of shares issuable in connection with the conversion premium increases as the trading price of the Company’s
common stock decreases, and the trading price of the Company’s common stock has decreased since the date the First Warrant
was exercised, triggering a further reduction in the conversion price of the conversion premium and an increase in the number
of shares due to the Investor in connection with the conversion of the amount owed in connection with the conversion premium.
An aggregate of 176,716 shares of common stock were issued to the Investor in connection with the exercise of the Warrant during
fiscal 2017 (8,000), fiscal 2018 (156,380), and 12,336 shares were issued in April 2018. The First Warrant has been fully-exercised
and extinguished to date. On
November 15, 2018, the Company entered into a consulting agreement with Regal Consulting, an investor relations firm, pursuant
to which the firm agreed to provide the Company investor relations and consulting services, for a period of six months, in consideration
for $28,000 and 8,000 restricted shares of the Company’s common stock, per month. The total value of the restricted shares
of common stock due of $171,000 has been accrued in common stock payable in the December 31, 2018
consolidated balance sheet. As
of December 31, 2018, the 44,000 outstanding shares of Series B Preferred Stock had accrued $16,500 in dividends. The Company
determined to pay the dividends by way of the issuance of an aggregate of 8 shares of its common stock to the preferred
shareholder pursuant to the terms of the designation (which provides that the Shares shall be based on a value of $2,187.50 per
share). The beneficial owner of the Series B Preferred Stock as of December 31, 2018, was Alan Dreeben, the Company’s former
director. The Company plans to issue the 8 shares once the additional listing of such shares is approved by the NYSE American. The
following summarizes the Company’s common stock activity during the nine-month period ended December 31, 2018:
Common
Shares
Amount (a) Per
Share Issued
and Outstanding Shares
Balance at March 31, 2018 230,363
Preferred Stock Series
C Conversion (b) — — 5,522,216
Preferred Stock Series
B Conversion — — 3,556
Preferred Stock Series
B Dividends — — 640
Warrants – Abeyance (b) — — 12,336
Issuance of Common
Stock for settlement of consulting agreement — — 2,000
Issuance
of Common Stock for Prior and Current Conversion of Convertible Notes — — 1,000,404
Balance at December
31, 2018 6,771,515
(a) Net proceeds or fair value
on grant date, as applicable.
(b) Shares
previously held in abeyance until such time as it would not result in the investor exceeding its beneficial ownership limitation
(4.99% of the Company’s outstanding common stock). Series
A Convertible Preferred Stock As
of December 31, 2018 and March 31, 2018, the Company had no Series A Convertible Preferred Stock issued or outstanding. Series
B Redeemable Convertible Preferred Stock On
September 1, 2016, as consideration for the closing of the Acquisition, the Company issued an aggregate of 552,000 shares of Redeemable
Convertible Preferred Stock, which had a total value of $13,800,000 based on the $25 per Series B Preferred Stock share par value.
The preferred shares were issued to RAD2 (200,000 shares) and Segundo Resources, LLC (an affiliate of RAD2) (352,000 shares) on
behalf of and for the benefit of RAD2. The
Company’s Series B Preferred Stock has a liquidation preference of $25 per share. The Series B Preferred Stock is convertible,
at the option of the holder at any time following the original issuance date, into common stock at a rate of approximately 0.011428:1
(originally issuable into an aggregate of 6,309 shares of common stock if fully converted), at the option of the holder thereof,
or automatically as to 25% of the Series B Preferred Stock shares if the Company’s common stock trades above $3,828.25 per
share for at least 20 consecutive trading days, and trades with at least 120 shares of average volume per day during such period;
an additional 50% of the Series B Preferred Stock shares if the Company’s common stock trades above $4,375.00 per share
for at least 20 consecutive trading days, and trades with at least 120 shares of average volume per day during such period; and
as to the remaining Series B Preferred Stock shares, if the Company’s common stock trades above $4,922.00 per share for
at least 20 consecutive trading days, and trades with at least 120 shares of average volume per day during such period. Each outstanding
share of Series B Preferred Stock will be entitled to one vote per share on all stockholder matters. The Series B Preferred Stock
is redeemable at any time by the Company upon the payment by the Company of the face amount of the Series B Preferred Stock ($25
per share) plus any and all accrued and unpaid dividends thereon. The
Company has the option, exercisable from time to time after the original issue date, to redeem all or any portion of the outstanding
shares of Series B Preferred Stock by paying each applicable holder, an amount equal to the original issue price multiplied by
the number of Series B Preferred shares held by each applicable holder plus the accrued dividends. As
of December 31, 2018, there were 44,000 shares of Series B Preferred Stock outstanding, which have the following features:
● a
liquidation preference senior to all of the Company’s common stock;
● a
dividend, payable quarterly, at an annual rate of six percent (6%) of the original issue price until such Series B Preferred Stock
is no longer outstanding either due to conversion, redemption or otherwise; and
● voting
rights on all matters, with each share having 1/625 th As
the Series B Preferred Stock is convertible at any time following the original issuance date into common stock at a rate of approximately
0.011428:1, the Company recognized a fair value measurement of $14,898,038 for the Series B Preferred Stock, which is based on
the 552,000 preferred shares originally issued times the conversion rate of approximately 0.011428, times the price of the Company’s
common stock of $2,362.50 per share at the date of the closing of the Acquisition on August 25, 2016. In
October 2018, Richard N. Azar II, both on his own behalf and on behalf of the entities which he beneficially owned, converted
all 364,508 shares of the Series B Preferred Stock which he beneficially owned into an aggregate of 4,166 shares of common stock,
of which 497 shares of newly converted common stock (along with a total of 113 shares previously beneficially owned by Mr. Azar)
were immediately cancelled pursuant to the terms of the Segundo Settlement, described above under “Note 8 – Commitments
And Contingencies”. Series
C Redeemable Convertible Preferred Stock On
April 6, 2016, the Company entered into a Stock Purchase Agreement with the Investor, pursuant to which it agreed, subject to
certain conditions, to sell 527 shares of Series C redeemable convertible preferred stock (with a face value of $5.26 million)
at a 5% original issue discount of $263,000, convertible into 64,738 shares of common stock at a conversion price of $3.25 per
share (to the best of the Company’s knowledge, the Investor has taken the position that such conversion price is not affected
by the Company’s stock splits, including the 1-for-25 reverse split which was affected on December 24, 2018), and a warrant
to purchase 1,778 shares of common stock at an exercise price of $2,812.50 per share (the “Second Warrant”). On
September 2, 2016, the Second Warrant and 53 shares of Series C Preferred Stock were issued for $526,450 ($500,000, net cash proceeds
to Camber) after the Acquisition (as defined and described in “Note 2 – Liquidity and Going Concern Considerations”)
closed. The prorated share of the $263,000 discount ($26,450) was recorded as reduction to additional paid in capital. On November
17, 2016, the remaining 474 shares of Series C Preferred Stock were issued for $4,736,550 ($4,500,000, net cash proceeds to Camber)
and the Company paid placement agent and legal fees of $514,000 for services rendered in connection with the issuance. The Company
also recognized $236,550 of the remaining 5% original issue discount, which was recorded as reduction to additional paid in capital. On
October 5, 2017, the Company and the Investor entered into a Stock Purchase Agreement, amended on March 2, 2018 (as amended, the
“October 2017 Purchase Agreement”) pursuant to which the Company agreed to sell, pursuant to the terms thereof, 1,684
shares of our Series C Redeemable Convertible Preferred Stock (the “Series C Preferred Stock”) for $16 million (a
5% original issue discount to the face value of such shares), subject to certain conditions set forth therein. On
March 2, 2018, the Company and the Investor entered into an amendment to the October 2017 Purchase Agreement (the “Amendment”),
pursuant to which the Investor (a) waived any and all Trigger Events (as defined in the certificate of designation of the Series
C Preferred Stock (the “Designation”)) that had occurred prior to March 2, 2018, (b) agreed that all calculations
provided for in the Designation would be made as if no such Trigger Event had occurred, and (c) waived any right to receive any
additional shares of common stock based upon any such Trigger Event, with respect to all shares of Series C Preferred Stock, other
than any which have already been converted. The
Investor also agreed, pursuant to the amendment, that the conversion rate of conversion premiums pursuant to the Designation would
remain 95% of the average of the lowest 5 individual daily volume weighted average prices during the applicable Measuring Period
(as defined in the Designation), not to exceed 100% of the lowest sales prices on the last day of the Measuring Period, less $0.05
per share of common stock, unless a triggering event has occurred, and that such $0.05 per share discount would not be adjusted
in connection with the Company’s previously reported 1-for-25 reverse stock split affected on March 5, 2018. During the three months
and nine months ended December 31, 2017, the Company sold the Investor an aggregate of 423 shares of Series C Preferred Stock
for $4 million under the terms of the October 2017 Purchase Agreement. October
2018 Stock Purchase Agreement On
October 29, 2018, the Company and the Investor entered into a Stock Purchase Agreement (the “October 2018 Purchase Agreement”),
whereby the Investor purchased 369 shares of Series C Preferred Stock for $3.5 million. The Series C Preferred
Stock sold pursuant to the October 2018 Purchase Agreement have substantially similar terms as those sold pursuant to the October
2017 Purchase Agreement. November
2018 Stock Purchase Agreement On
November 23, 2018 and effective November 23, 2018, the Company and the Investor entered into a Stock Purchase Agreement (the “November
2018 Purchase Agreement”). The Series C Preferred Stock sold pursuant to the November 2018 Purchase Agreement have substantially
similar terms as those sold pursuant to the October 2017 Purchase Agreement. Under
the terms of the November 2018 Purchase Agreement, the Investor agreed to purchase up to 2,941 shares of Series C Preferred Stock
(the “Maximum Shares”) from the Company for an aggregate of $28 million, including agreeing to purchase 106 shares
of Series C Preferred Stock within two business days of the satisfaction of the Closing Conditions (defined below), in consideration
for $1 million (the “Initial Closing”), and additional shares of Series C Preferred Stock, in such amount(s) requested
by the Company, from time to time, up to the remaining amount of Series C Preferred Stock available to be sold under the November
2018 Purchase Agreement, until the Maximum Shares are sold, subject in each case to the Closing Conditions. Closing
conditions required to be met in order to require the Investor to purchase the Series C Preferred Stock shares described above
at each of the closings include, among other things, that (a) the Company’s common stock is required to be listed for and
currently trading on the NYSE American market or a higher trading market; (b) except for the Initial Closing, the Company is required
to be in compliance with all requirements to maintain such listing and there cannot be any notice of any suspension or delisting
with respect to the trading of the shares of common stock on such trading market; (c) the Company is required to have duly authorized
shares of common stock reserved for issuance to Investor in an amount equal to three times the number of shares sufficient to
immediately issue all shares of common stock potentially issuable upon conversion of the Series C Preferred Stock sold to Investor
(collectively, the “Conversion Shares”) and any other agreements with Investor; (d) except with regard to the Initial
Closing, (i) an aggregate dollar trading volume of at least $10 million must have traded on NYSE American during regular trading
hours, from the trading day after the immediately prior closing until the trading day immediately before the relevant closing,
but expressly excluding all volume traded on any days that the Investor is prevented or delayed from reselling shares of common
stock (“Excluded Days”), for each $1 million of Series C Preferred Stock shares which are sold at any closing after
the Initial Closing; and (ii) the Company’s common stock is required to have a volume weighted average price on the NYSE
American for the prior trading day of at least $0.10 per share of common stock (the “Floor Price”), (e) except with
regard to the Initial Closing, the additional listing of all of the Conversion Shares must be approved by the NYSE American; and
(f) except with regard to the Initial Closing, the Company must have provided written notice to the Investor of its intent to
move forward with the applicable closing at least 10 days prior to the applicable closing date, provided that if any such conditions
are not met on the date initially set for such closing, each closing will occur as soon thereafter as they are met, if ever (collectively,
the “Closing Conditions”). The closing of the sales of Series C Preferred Stock as described above are subject to
closing conditions which may not be met timely, if at all, and as such, we may not ever sell any shares of Series C Preferred
Stock under the November 2018 Purchase Agreement. In the event a Trigger Event (as defined in the Designation (defined below)
occurs, the Investor can terminate its obligation to acquire any additional shares of Series C Preferred Stock under the November
2018 Agreement, and the Company may terminate the Company’s right to sell shares of Series C Preferred Stock at any time. On
December 3, 2018, the Company entered into a First Amendment to Stock Purchase Agreement with the Investor (the “First Amendment”),
pursuant to which the parties agreed to (a) amend the Initial Closing to be for a total of $2.5 million and 263 shares of Series
C Preferred Stock, and (b) change the terms of the November 2018 Purchase Agreement to require that, notwithstanding the other
closing conditions set forth in the November 2018 Purchase Agreement, for each sale of $800,000 of Series C Preferred Stock, in
additional closings after the Initial Closing, that an aggregate dollar trading volume of at least $10 million must have traded
on NYSE American during regular trading hours, from the trading day after the immediately prior closing until the trading day
immediately before the relevant closing, but expressly excluding all volume traded on any days that the Investor is prevented
or delayed from reselling shares of common stock. On
December 4, 2018, upon the satisfaction of the applicable closing conditions, the Investor acquired 262 shares of Series C Preferred
Stock for a total of $2.5 million. Series
C Preferred Stock The
holder of the Series C Preferred Stock is entitled to cumulative dividends through maturity, which initially totaled 6% per annum,
and are adjustable to up to 34.95% per annum, based on certain triggering events and the trading price of the Company’s
common stock, and which currently total 34.95% per annum on the Series C Preferred Stock sold pursuant to the October 2017 Purchase
Agreement, payable in full through maturity upon redemption, conversion, or maturity, and when, as and if declared by the Company’s
Board of Directors in its discretion. The Series C Preferred Stock ranks senior to the common stock and pari passu with respect
to the Company’s Series B Redeemable Convertible Preferred Stock. The
Series C Preferred Stock may be converted into shares of common stock at any time at the option of the holder, or at the Company’s
option if certain equity conditions (as defined in the Certificate of Designation) are met. Upon conversion, we will pay the holder
of the Series C Preferred Stock being converted an amount, in cash or stock at the Company’s sole discretion, equal to the
dividends that such shares would have otherwise earned if they had been held through the maturity date (7 years), and issue to
the holder such number of shares of common stock equal to $10,000 per share of Series C Preferred Stock (the “Face Value”)
multiplied by the number of such shares of Series C Preferred Stock divided by the conversion rate ($3.25 per share) (to the best
of the Company’s knowledge, the Investor has taken the position that such conversion price is not affected by the Company’s
stock splits, including the 1-for-25 reverse split which was affected on December 24, 2018). The
conversion premium under the Series C Preferred Stock is payable and the dividend rate under the Series C Preferred Stock is adjustable
on the same terms and conditions as accrued interest is payable and adjustable under the Debenture. The Series C Preferred Stock
has a maturity date that is seven years after the date of issuance and, if the Series C Preferred Stock has not been wholly converted
into shares of common stock prior to such date, we may redeem the Series C Preferred Stock on such date by repaying to the holder
in cash 100% of the Face Value plus an amount equal to any accrued but unpaid dividends thereon. 100% of the Face Value, plus
an amount equal to any accrued but unpaid dividends thereon, automatically becomes payable in the event of a liquidation, dissolution
or winding up by us. During
the three and nine-month periods ended December 31, 2018, the Company sold 632 and 1,577 shares of Series C Preferred Stock pursuant
to the terms of the October 2017 Purchaser Agreement, October 2018 Purchase Agreement and November 2018 Purchase Agreement (as
applicable), for total consideration of $6 million and $15 million, respectively. As of December 31, 2018 and March 31, 2018,
there were 2,305 and 1,132 shares of Series C Preferred Stock outstanding, respectively. During
the three and nine-month periods ended December 31, 2018, the Investor converted 10 and 404 shares of the Series C Preferred stock
with a face value of $0.4 million and $4.34 million for a total of 5.5 million shares of common stock issued. As
of December 31, 2018 and March 31, 2018, the Company accrued common stock dividends on the Series C Preferred Stock based on the
then 34.95% and 24.95% premium dividend rate per the 2016 and 2017 Stock Purchase Agreement, respectively, as described above.
The Company recognized a total charge to additional paid-in capital and stock dividends distributable but not issued of $3,211,064
and $1,928,084 related to the stock dividend declared but not issued for the nine-month period ended December 31, 2018 and the
year ended March 31, 2018, respectively. Warrants On
October 7, 2016, the Investor exercised the First Warrant in full and was due 2,215 shares of common stock upon exercise thereof
and an additional 4,068 shares of common stock in consideration for the conversion premium due thereon. A total of 1,296 shares
were issued to the Investor on October 7, 2016, with the remaining shares being held in abeyance until such time as it would not
result in the Investor exceeding its beneficial ownership limitation (4.99% of the Company’s outstanding common stock).
The Company received gross proceeds of $4,500,000 from the exercise of the First Warrant and paid placement agent fees of $427,500
for services rendered in connection with the First Warrant. Pursuant to the terms of the First Warrant, the number of shares due
in consideration for the conversion premium increases as the annual rate of return under the First Warrant increases, including
by 10% upon the occurrence of certain triggering events (which had occurred by the October 7, 2016 date of exercise), to 17% per
annum upon the exercise of the First Warrant. An
aggregate of 176,716 shares of common stock were issued to the Investor in connection with the exercise of the First Warrant during
fiscal year 2017 (8,000), fiscal year 2018 (156,380), and 12,336 shares were issued in April 2018, in connection with the original
exercise and true-ups. The First Warrant has been fully-exercised and extinguished to date. At
December 31, 2018 and March 31, 2018, outstanding warrants had an intrinsic value of $0 and $232, respectively. The intrinsic
value is based upon the difference between the market price of Camber’s common stock on the date of exercise and the grant
price of the stock options. The
following is a summary of the Company’s outstanding warrants at December 31, 2018:
Warrants Exercise Expiration Intrinsic
Value at
Outstanding Price
($) Date December
31, 2018
107 (1) 252.11 April
21, 2019 —
199 (2) 937.50 April 26, 2021 —
2,560 (3) 156.25 June 12, 2022 —
40,000 (4) 9.75 May 24, 2023 —
42,866 $ —
(1) Warrants
issued in connection with the sale of units in the Company’s unit offering in April 2014. The warrants became exercisable
on April 21, 2014 and will remain exercisable thereafter until April 21, 2019.
(2) Warrants
issued in connection with the sale of convertible notes. The warrants were exercisable on the grant date (April 26, 2016)
and remain exercisable until April 26, 2021.
(3) Warrants
issued in connection with the Initial Tranche of the funding from Vantage. The warrants were exercisable on the grant date
(June 12, 2017) and remain exercisable until June 12, 2022.
(4) Warrants
issued in connection with the Severance Agreement with Richard Azar. The warrants were exercisable on the grant date (May
25, 2018) and remain exercisable until May 24, 2023. |
