| Stockholders' Equity | Common Stock: On May 3, 2017, the Company closed an underwritten
public offering of 18,619,301 shares of its common stock, par value $0.001 per share, together with Series A warrants (“Series
A Warrants”) to purchase up to an aggregate of 13,964,476 shares of its common stock and Series B warrants (“Series
B Warrants”) to purchase up to an aggregate of 13,964,476 shares of its common stock. Series A Warrants have an exercise
price of $0.75 per share of common stock and will expire thirteen months following the Exercisable Date (defined below). Series
B Warrants have an exercise price of $1.05 per share of common stock and will expire five years following the Exercisable Date.
The net proceeds from this public offering was approximately $12.8 million. The Company issued to the underwriter warrants
to purchase up to an aggregate of 1,117,158 shares of common stock, with an exercise price of $0.9375, which represents 125% of
the public offering price per combined share and related warrants. The underwriter warrant will expire five years following the
Exercisable Date. Other than the exercise price, the terms of the underwriter warrants are the same as the Series B Warrants. In May 2017, the Company did not have a sufficient
number of authorized shares of common stock to cover the shares issuable upon exercise of the warrants issued in the May 2017 public
offering and therefore classified the fair value of the warrants as a derivative liability at June 30, 2017. On August 8, 2017,
the Company’s shareholders approved the amendment of the Company’s amended and restated Certificate of Incorporation
(the “Charter Amendment”) increasing the shares of authorized capital stock from 82,000,000 shares to 162,000,000 shares
and increasing the number of authorized shares of common stock from 80,000,000 to 160,000,000 shares. The fair value of these warrants
was re-measured on August 10, 2017, the date the warrants became exercisable (the “Exercisable Date”), with the increase
in value recorded as a loss in the statement of operations. The fair value of the warrants at August 10, 2017 was reclassified
then from liability to equity. In December 2017, the Company sold an aggregate
of 624,246 shares of its common stock to its directors and executive officers and to certain of its employees at a per share purchase
price of $0.48. The Company realized gross proceeds of approximately $300,000. (See Note 4 – Related Party Transactions). During the year ended December 31, 2017, the
Company entered into warrant exchange agreements whereby the Company agreed to exchange with various investors (the “Investors”)
Series A warrants issued in its May 2017 public offering of common stock and warrants. The exchanged warrants provided for the
purchase of up to an aggregate of 9,886,250 shares of the Company’s common stock at an exercise price of $0.75, with an expiration
date of September 10, 2018. The Company issued an aggregate of 2,471,561 shares of common stock to the Investors in exchange for
these warrants at an exchange rate of 25%. During the year ended December 31, 2017, the
Company issued 10,000 shares of its common stock upon exercise of stock options resulting in gross proceeds of $6,800 to the Company. During the year ended December 31, 2017, the
Company issued an aggregate of 325,000 shares of its common stock upon conversion of an aggregate of 32,500 Series C-3 non-voting
preferred stock. During the year ended December 31, 2017, the
Company issued 970 shares of its common stock upon cashless exercise of 62,500 warrants. The Company has a sales agreement, as
amended on December 8, 2017, with B. Riley (the “Sales Agreement”) under which the Company may issue and sell up
to an aggregate of $60.0 million of shares of its common stock from time to time through B. Riley acting as agent, subject
to limitations imposed by the Company and subject to B. Riley’s acceptance, such as the number or dollar amount of
shares registered under the registration statement to which the offering relates. When the Company wishes to issue and sell
common stock under the Sales Agreement, it notifies B. Riley of the number of shares to be issued, the dates on which such
sales are anticipated to be made, any minimum price below which sales may not be made and other sales parameters as the
Company deems appropriate. B. Riley is entitled to a commission of up to 3% of the gross proceeds from the sale of common
stock sold under the Sales Agreement. The shares of common stock to be sold under the Sales Agreement are registered under an
effective registration statement filed with the SEC. During the years ended December 31, 2017 and 2016, the shares of common
stock under the Sales Agreement issued by the Company were 5,239,815 and 3,360,037, respectively, and realized net proceeds
of $3,484,000 in 2017 and $6,229,000 in 2016. As of December 31, 2017, the Company had approximately $17.9 million
available under the Sales Agreement which will expire on April 16, 2018. During the year ended December 31, 2016, the
Company also issued 21,454 shares of common stock upon cashless exercise of 25,000 warrants and 1,087,500 shares of common stock
upon exercise of stock options at a weighted average exercise price of $0.79 per share, resulting in gross proceeds of $863,000
to the Company. Restricted Stock Units During the year ended December 31, 2017, the
Company granted an aggregate of 112,931 restricted stock units (“RSUs”) to its officers and directors under its 2013
Stock Incentive Plan with a weighted average grant date fair value of $2.15 per share. These RSUs vest over various dates through
December 31, 2018. During the year ended December 31, 2017, compensation expense recorded for these RSUs was $88,000. Unrecognized
compensation expense as of December 31, 2017 was $50,000. The expected weighted average period for the expense to be recognized
is 0.48 years. During the year ended December 31, 2017, 46,517 RSUs were forfeited. Preferred Stock The Company is authorized to issue up to 2,000,000
shares of preferred stock in one or more series without stockholder approval. The Company’s board of directors has the discretion
to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights,
redemption privileges and liquidation preferences, of each series of preferred stock. Of the 2,000,000 shares of preferred stock
authorized, the Company’s board of directors has designated (all with par value of $0.001 per share) the following:
As of December 31, 2017 As of December 31, 2016
Preferred Shares Outstanding Liquidation Preference (Per Share) Total Liquidation Preference Preferred Shares Outstanding Liquidation Preference (Per Share) Total Liquidation Preference
Series C-2 150,000 10.0 1,500,000 150,000 10.0 1,500,000
Series C-3 104,000 10.0 1,040,000 136,500 10.0 1,365,000
Series D 73,962 21.0 1,553,202 73,962 21.0 1,553,202
Series E 89,623 49.2 4,409,452 89,623 49.2 4,409,452
Series F 2,000 1,000 2,000,000 - - -
Total 419,585 10,502,654 450,085 8,827,654 On November 9, 2017, the Company
entered into a securities purchase agreement with existing institutional investors (the “Buyers”), pursuant to
which, on November 16, 2017, the Company sold $2.0 million of its newly designated Series F convertible preferred stock
(“Series F Stock”) at $1,000 per share. Each share of Series F Stock is convertible into shares of the
Company’s common stock, at the option of the Buyers, at an effective price of $0.6334 per share, which represents a 20%
premium to the closing price of the Company’s common stock on November 8, 2017. The conversion price of the Series F
Stock is subject to anti-dilution adjustment for customary recapitalization events such as stock splits, as well as full
ratchet anti-dilution protection in the event that the Company does not obtain the subordination of the Series C-3 preferred
stock to that of the Series F Stock (as described below) or obtain stockholder approval of the issuance of common stock that
exceeds NYSE American rules (as described below). The Series F Stock will be mandatorily convertible on April 2, 2018,
subject to certain equity conditions, at (A) the lower of (i) $0.6334 and (ii) a 10% discount to the notional price at which
an equity or equity linked transaction in an amount of $3 million or more is completed by March 31, 2018, or (B) if such a
transaction is completed and results in gross proceeds of less than $3 million, the average closing price of the common stock
for the immediately preceding five trading days, or (C) otherwise the lower of (i) $0.6334 and (ii) a 10% discount to the
closing price of the stock on April 2, 2018. The Series F Stock is non-voting and has no dividend
right outside of receiving dividends in the same form as we pay to holders of shares of our common stock. It contains a prohibition
on its conversion if, as a result of such conversion, the Company would have issued shares of our common stock in an aggregate
amount equal to 13,336,939 shares, which is 20% of its outstanding shares of common stock on November 9, 2017, unless the Company
has received the approval of its stockholders for such overage, or the Series F Stock does not rank senior to all previously issued
preferred stock. The Buyers will be prohibited from converting
Series F Stock into shares of its common stock to the extent that, as a result of such conversion, the Buyers, together with their
affiliates, would own more than 9.99% of the total number of shares of our common stock then issued and outstanding. In the event
of the Company’s liquidation, dissolution, or winding up, holders of the Series F Stock will receive a payment equal to $1,000
per share of Series F Stock, subject to adjustment, before any proceeds are distributed to the holders of common stock. Shares
of the Series F Stock will rank:
● senior to all common stock and the Series C-2, Series C-3 Convertible Preferred Stock (subject to the Company obtaining any consent, waiver or other authorization from the holders of the Series C-3 Convertible Preferred Stock necessary for the subordination of the Series C-3 Convertible Preferred Stock to the Series F Preferred Stock), Series D Non-Voting Convertible Preferred Stock, Series E Non-Voting Convertible Stock; and
● senior to any class or series of capital stock hereafter created. in each case, as to distributions of assets upon our liquidation,
dissolution or winding up whether voluntarily or involuntarily. As a part of the financing, the Company also
entered into a registration rights agreement with the Buyers whereby the Buyers can demand that the Company register the shares
issuable upon exercise of the warrants, and shares issuable upon conversion of the Series F Stock, if issued. The backstop agreement (see Warrant section of
this Note) provides that until the later of (x) the date that no Series F preferred shares are outstanding and (y) the date the
no warrants issued under the backstop agreement are outstanding, the Company may not effect a issue any securities in a “variable
rate transaction” other than at-the-market offerings through a registered broker-dealer or offerings of the Series F preferred
stock. A “variable rate transaction” is a transaction on terms more favorable than those of the backstop agreement
and the Series F preferred stock, in which the Company issues any convertible securities either (A) at a conversion, exercise or
exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of the Company’s
common Stock at any time after the initial issuance of such convertible securities, or (B) with a conversion, exercise or exchange
price that is subject to being reset at some future date after the initial issuance of such convertible securities or upon the
occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for its
common stock, other than pursuant to a customary “weighted average” anti-dilution provision or (ii) enters into any
agreement (other than an at-the-market offering through a registered broker-dealer) whereby the Company may sell securities at
a future determined price (other than standard and customary “preemptive” or “participation” rights). The following terms and conditions apply to the
Series C, Series D and Series E non-voting convertible preferred stock outstanding at December 31, 2017 and 2016: Dividends Fundamental Transactions- Redemption Listing- Series C-2 and Series C-3 Non-Voting Convertible Preferred Stock
and Warrants In October 2013, the Company issued 150,000 shares
of Series C-2 non-voting convertible preferred stock, together with warrants to purchase up to an aggregate of 1,500,000 shares
of common stock. In January 2014, the Company sold to various
investors 200,000 shares of Series C-3 non-voting convertible preferred stock, together with warrants to purchase up to an aggregate
of 1,000,000 shares of common stock, for aggregate gross proceeds of $2,000,000. The Series C-2 non-voting preferred stock and
Series C-3 non-voting preferred stock have identical rights, privileges and terms and are referred to collectively as the “Series
C Stock.” Each share of Series C Stock is convertible into 10 shares of common stock at any time at the holder’s
option at a conversion price of $1.00 per share. In the event of the Company’s liquidation, dissolution, or winding
up, holders of the Series C Stock will receive a payment equal to $10.00 per share of Series C Stock, subject to adjustment, before
any proceeds are distributed to the holders of common stock. Shares of the Series C Stock will not be entitled to receive
any dividends, unless and until specifically declared by the Company’s board of directors. The Series C Preferred Stock ranks senior to
the Company’s common stock; senior Series D Non-Voting Convertible Preferred
Stock Each share of Series D non-voting convertible
preferred stock is convertible into 20 shares of common stock (subject to adjustment) at a per share price of $0.35 at any time
at the option of the holder, except that a holder will be prohibited from converting shares of Series D non-voting convertible
preferred stock into shares of common stock if, as a result of such conversion, such holder, together with its affiliates, would
beneficially own more than 9.99% of the total number of shares of the Company’s common stock then issued and outstanding.
In the event of the Company’s liquidation, dissolution or winding up, holders of Series D non-voting convertible preferred
stock will receive a payment equal to $21.00 per share of Series D non-voting convertible preferred stock on parity with the payment
of the liquidation preference due the Series E non-voting convertible preferred stock, but before any proceeds are distributed
to the holders of common stock, the Series C-2 non-voting convertible preferred stock. The Series D non-voting convertible preferred
stock ranks senior to the Company’s common stock; senior to any class or series of capital stock created after the issuance
of the Series D non-voting convertible preferred stock; senior to the Series C-2 non-voting convertible preferred stock and the
Series C-3 non-voting convertible preferred stock; on parity with the Series E non-voting convertible preferred stock; and junior
to the Series F non-voting convertible preferred stock. As long as any of the Series D non-voting convertible preferred stock is
outstanding, the Company cannot incur any indebtedness other than indebtedness existing prior to September 15, 2014, trade payables
incurred in the ordinary course of business consistent with past practice, and letters of credit incurred in an aggregate amount
of $3.0 million at any point in time. In addition to the debt restrictions above, as
long as any shares of the Series D non-voting convertible preferred stock are outstanding, the Company cannot, among others things:
create, incur, assume or suffer to exist any encumbrances on any of its assets or property; or redeem, purchase or otherwise acquire
or pay or declare any dividend or other distribution on any junior securities. Series E Non-Voting Convertible Preferred Stock Each share of Series E non-voting convertible
preferred stock was originally convertible into 21.8667 shares of the Company’s common stock (subject to adjustment) at a
per share price of $0.75 at any time at the option of the holder, except that a holder will be prohibited from converting shares
of Series E non-voting convertible preferred stock into shares of common stock if, as a result of such conversion, such holder,
together with its affiliates, would beneficially own more than 9.99% of the total number of shares of the Company’s common
stock then issued and outstanding. In the event of the Company’s liquidation, dissolution or winding up, holders
of Series E preferred stock will receive a payment equal to $49.20 per share of Series E non-voting convertible preferred stock
on parity with the payment of the liquidation preference due the Series D non-voting convertible preferred stock, but before any
proceeds are distributed to the holders of common stock, the Series C-2 non-voting convertible preferred stock. The Series E non-voting convertible preferred
stock ranks senior to the Company’s common stock; senior to any class or series of capital stock created after the issuance
of the Series E non-voting preferred stock; senior to the Series C-2 and the Series C-3 non-voting convertible preferred stock;
on parity with the Series D non-voting convertible preferred stock; and junior to the Series F non-voting convertible preferred
stock. As long as any of the Series E non-voting convertible preferred stock is outstanding, the Company cannot incur any indebtedness
other than indebtedness existing prior to September 15, 2014, trade payables incurred in the ordinary course of business consistent
with past practice, and letters of credit incurred in an aggregate amount of $3.0 million at any point in time. In addition to the debt restrictions above, as
long as any the Series E non-voting convertible preferred stock is outstanding , the Company cannot, among others things: create,
incur, assume or suffer to exist any encumbrances on any of our assets or property; redeem, repurchase or pay any cash dividend
or distribution on any of our capital stock (other than as permitted); redeem, repurchase or prepay any indebtedness; or engage
in any material line of business substantially different from our current lines of business. In the event the Company issues any options,
convertible securities or rights to purchase stock or other securities pro rata to the holders of common stock, then holders of
Series E non-voting convertible preferred stock will be entitled to acquire, upon the same terms a pro rata amount of such stock
or securities as if the Series E non-voting convertible preferred stock had been converted to common stock. Stock Options: The Company’s 2013 Stock Incentive
Plan (the “2013 Plan”) was approved by the shareholders in July 2013. The 2013 Plan provides for the issuance of
equity grants in the form of options, restricted stock, stock awards and other forms of equity compensation. Awards may be
made to directors, officers, employees and consultants under the 2013 Plan. Initially, an aggregate of 5,000,000 shares of
the Company’s common stock was reserved for issuance under the 2013 Plan. On January 19, 2016, the shareholders
approved the increase of the shares issuable under the 2013 Plan from 5,000,000 to 8,000,000 and on June 13, 2016 from
8,000,000 to 11,000,000. During the year ended December 31, 2017, the
Company granted ten-year qualified and non-qualified stock options to its officers, directors, employees and consultants covering
an aggregate of 1,387,500 shares of the Company’s common stock under the 2013 Stock Incentive Plan. The weighted average
exercise price of these options is $1.54 per share. During the year ended December 31, 2016, the
Company granted ten-year non-qualified stock options under the 2013 Plan covering an aggregate of 2,891,000 shares of the Company’s
common stock to its officers, directors, employees and consultants. Of these options, 1,850,000 were granted on September 30, 2016
to the Company’s new CEO in connection with his employment. 1,250,000 of the options will vest in four equal annual installments
on the first four anniversaries of the grant date. Of the remaining options, 300,000, split into three equal tranches, become exercisable
upon the achievement of specified performance milestones, provided that these options will be forfeited if the milestones are not
achieved within four years of grant date and provided further that these options will not vest before December 18, 2018. The remaining
300,000 options become exercisable upon the achievement of a specified average closing stock price, provided that these options
will not vest before December 31, 2018 and if the closing price per share of the Company’s common stock is below the specified
average closing stock price on December 31, 2018, the options will be forfeited. In each case, the new CEO must be an employee
of the Company or consultant to the Company on the applicable vesting date. The total fair value of the 1,850,000 stock options
issued to the Company’s CEO on the date of grant was $3,186,450 which is being amortized to expense over the related vesting
periods. During the years ended December 31, 2017 and
2016, total compensation expense for stock options issued to employees, directors, officers and consultants was $1,571,137 and
$1,335,157, respectively. As of December 31, 2017, there was $2,834,000
total unrecognized compensation expense related to stock options granted which expense will be recognized over an expected remaining
weighted average period of 1.67 years. Effective October 1, 2016, the Company adopted
Accounting Standards Update (“ASU”) 2016-09, Compensation — Stock Compensation Improvements to Employee Share-Based Payment Accounting The fair value at grants dates of the grants
issued subject to service and performance based vesting conditions were determined using the Black-Scholes option pricing model
with the following assumptions:
Year Ended December 31,
2017 2016
Risk-free interest rate 1.77% - 2.40% 1.14% - 1.94%
Expected volatility 95% - 106% 96% - 98%
Expected term (years) 5 - 10 years 5 - 10 years
Expected dividend yield 0.0% 0.0%
Weighted-average grant date fair value of options granted during the period $ 1.18 $ 1.76 The Company estimated the expected term of the
stock options granted based on anticipated exercises in future periods. The expected term of the stock options granted to consultants
is based upon the full term of the respective option agreements. Beginning January 1, 2017, the expected stock price volatility
for the Company’s stock options is calculated based on the historical volatility since the initial public offering of the
Company’s common stock in March 2010. In 2016, the expected stock price volatility was calculated based on the historical
volatility since the initial public offering, weighted between the period pre and post CE Mark approval in the European Union.
The expected dividend yield of 0.0% reflects the Company’s current and expected future policy for dividends on the Company’s
common stock. To determine the risk-free interest rate, the Company utilized the U.S. Treasury yield curve in effect at the time
of grant with a term consistent with the expected term of the Company’s awards which is 5 years for employees and 10 years
for non-employees. The fair value of the grant issued subject to
a market based vesting condition was determined using the Monte Carlo option pricing model which values financial instruments whose
value is dependent on share price by sampling random paths for share price. The key inputs for the simulation included the closing
stock price of the Company on the date of grant, the expected term of the stock options granted was based on anticipated exercises
in future periods, the expected stock price volatility for the Company’s stock options was calculated based on the historical
volatility since the initial public offering of the Company’s common stock in March 2010, weighted pre and post CE Mark,
the expected dividend yield of 0.0% reflects the Company’s current and expected future policy for dividends on the Company’s
common stock and the risk-free interest rate which was determined by utilizing the U.S. Treasury yield curve in effect at the time
of grant with a term consistent with the expected term of the Company’s awards. The table below summarizes the key inputs
used in the Monte Carlo simulation:
Expected Term 5 years
Volatility 97 %
Dividend yield 0.0 %
Risk-free interest rate 1.13 %
Weighted-average grant date fair value of options granted during the period $ 1.12 The following table summarizes the Company’s
stock options activity and related information for the year ended December 31, 2017:
Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value
Outstanding at beginning of year 4,609,755 $ 2.29 8.2 $ 581,823
Granted 1,387,500 $ 1.54 247,500
Exercised (10,000 ) $ 0.68 13,200
Expired/Cancelled (588,344 ) $ 2.97
Forfeited (436,116 ) $ 1.85
Outstanding at end of year 4,962,795 $ 2.04 7.5 $ 247,500
Vested at end of year 2,479,971 $ 1.91 6.1 $ 76,249
Expected to vest in the future 2,482,824 $ 2.17 8.9 $ 171,251 The total intrinsic value of stock options exercised
during the years ended December 31, 2017 and 2016 was $13,200 and $1,497,506, respectively. The aggregate intrinsic value is calculated
as the difference between the exercise prices of the underlying options and the quoted closing price of the common stock of the
Company at the end of the reporting period for those options that have an exercise price below the quoted closing price. Warrants: On November 9, 2017, in addition to the securities
purchase agreement issued to the Buyers (See Preferred Stock, Note 7), the Company entered into a backstop agreement with the Buyers
to purchase additional Series F convertible preferred Stock at $1,000 per share, at the Company’s sole discretion, beginning
January 15, 2018 through March 31, 2018. As consideration for the backstop agreement, the Company issued 564,858 warrants, exercisable
for three years, to purchase shares of the Company’s common stock at a per share exercise price of $0.001. The number of
shares issuable under the warrant was determined by the closing price of the Company’s common stock on November 8, 2017,
which was $0.5278, reduced by the amount of equity capital raised from the ATM program and the sale of common stock to
directors, executive officers and other certain employees of the Company totaling $2.4 million. Each Buyer may convert the preferred
stock into common stock at its option at an effective price of $0.6334 per share, which represents a 20% premium to the closing
price of the Company’s common stock on November 8, 2017. On November 16, 2017, the Company recorded a derivative liability
of $270,592 and a corresponding reduction to additional paid in capital based on the initial Black Scholes valuation. The warrants
were initially classified as a liability as the Company had a conditional obligation to settle the warrants by issuing a variable
number of shares with variations of the obligation based on inputs other than the fair value of the Company’s shares (i.e.
the amount subject to the backstop agreement). The fair value of the warrants was determined
using a Black-Scholes option pricing model using the following assumptions at the grant date of the warrants:
November 16, 2017
Expected Term 3.00 years
Volatility 98 %
Dividend yield 0.0 %
Exercise Price $ 0.00
Risk-free interest rate 1.83 %
Fair value of warrants granted $ 270,592
Number of shares underlying warrants granted 564,858 On December 24, 2017, the derivative liability
of $327,079 was reclassified to equity as the number of issued warrants was determined on that date. Prior to the reclassification
to equity, an expense of $56,487 for the change in fair value of derivative liability was recorded on the Company’s consolidated
statement of operations and comprehensive income (loss) for the year ended December 31, 2017, which represented the increase in
the fair value of the derivative liability from November 16, 2017, the original valuation date of the warrants, and December 24,
2017, the date the warrants became classified as equity. As these warrants were liability-classified prior
to the reclassification to equity, the fair value of the warrants were revalued at December 24, 2017 using the following assumptions:
December 24, 2017
Expected Term 2.90 years
Volatility 98 %
Dividend yield 0.0 %
Exercise Price $ 0.00
Risk-free interest rate 2.01 %
Weighted average fair value of warrants granted $ 327,079
Number of shares underlying warrants granted 564,858 In the May 2017 public offering, the Company
issued 29,046,110 warrants, of which 9,886,250 warrants were subsequently exchanged for 2,471,561 shares of the Company's common
stock during the year ended December 31, 2017. In the May 2017 public offering, the Company
did not have sufficient number of authorized shares of common stock available to reserve the shares issuable upon the exercise
of 29,046,110 outstanding warrants issued in the May 2017 public offering. Therefore, these warrants were classified as liabilities
at June 30, 2017 and were re-measured on August 10, 2017, which was the Exercisable Date, with any increase or decrease in value
recorded as a loss or gain in the income statement. The Company recorded a loss of $1,974,019 during the year ended December 31,
2017. As of August 9, 2017, the Company had enough authorized shares to cover the issuance of these warrants, and therefore the
derivative liability was reclassified to equity on that date in the amount of $3,854,195. The fair value of the warrants was determined
using a probability-weighted Black-Scholes option pricing under different scenarios regarding the expected probability and timing
of sufficient additional shares being authorized to allow the warrants to become exercisable. The following assumptions were used
to value the warrants at the grant date.
Series A Series B Underwriter’s
Expected Term 1.18 – 1.33 years 5.10 – 5.25 years 5.10 – 5.25 years
Volatility 55% 55% 55%
Dividend yield 0.0% 0.0% 0.0%
Exercise Price $0.75 $1.05 $0.94
Risk-free interest rate 1.13% - 1.16% 1.86% - 1.88% 1.86% - 1.88%
Weighted average fair value of warrants granted $0.08 $0.17 $0.18
Number of shares underlying warrants granted 13,964,476 13,964,476 1,117,158 As these warrants are liability-classified, they
were revalued at August 10, 2017 using the following assumptions:
Series A Series B Underwriter’s
Expected Term 1.09 5.00 5.00
Volatility 96.95% 96.95% 96.95%
Dividend yield 0.0% 0.0% 0.0%
Exercise Price $ 0.75 $ 1.05 $ 0.94
Risk-free interest rate 1.22% 1.76% 1.76%
Weighted average fair value of warrants $ 0.06 $ 0.20 $ 0.20 The following table is the summary of warrant
activities:
Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life
Outstanding at December 31, 2016 4,006,468 $ 1.65 2.36
Issued 29,610,968 0.95 3.77
Converted to common shares (9,886,250 )
Exercised (62,500 ) 0.40 -
Expired (250,795 ) 0.40 -
Outstanding at December 31, 2017 23,417,891 $ 1.08 3.42 Various warrants that the Company has issued
contain a prohibition on the Company entering into a merger, sale of all or substantially all of its assets or similar transaction
unless the acquiring entity assumes all of the obligations of the Company under the warrants and also is a publicly traded corporation
whose common stock is quoted on or listed for trading on a securities exchange, provided that this prohibition will not apply to
an all cash acquisition. Stock-based Deferred Compensation Plan for Non-Employee Directors During the third quarter of 2014, the Company
established an unfunded stock-based deferred compensation plan, providing non-employee directors the opportunity to defer up to
one hundred percent of fees and compensation, including restricted stock units. The amount of fees and compensation deferred
by a non-employee director is converted into stock units, the number of which is determined based on the closing price of the Company’s
common stock on the date such compensation would have otherwise been payable. At all times, the plan participants are one
hundred percent vested in their respective |
