| Equity | NOTE 3 - EQUITY:
a.
During the nine months ended September 30,
2020, the Company issued a total of 270,000 shares of its common stock in connection with the exercise of 270,000 Pre-Funded Warrants
issued in September 2019. As of September 30, 2020, there are no outstanding Pre-Funded Warrants issued in September 2019.
b.
On June 5, 2020, the Company closed an underwritten public offering
of (i) 7,635,800 units (“Units”), with each Unit being comprised of one share of the Company’s common stock,
par value $0.0001 per share, and one Series F warrant (a “Series F Warrant”) to purchase one share of common stock,
and (ii) 14,586,400 pre-funded units (the “Pre-Funded Units”), with each Pre-Funded Unit being comprised of one pre-funded
warrant (a “Pre-Funded Warrant”) to purchase one share of common stock and one Series F Warrant. In connection with
this public offering, the underwriter exercised its over-allotment option in full and purchased an additional 3,333,300 shares
of common stock and 3,333,300 Series F Warrants. The offering price to the public was $0.45 per Unit and $0.449 per Pre-Funded
Unit. The net proceeds to the Company from the offering and the exercise of the underwriter’s over-allotment option were
approximately $10.7 million, after deducting underwriting discounts and commissions and payment of other estimated expenses associated
with the offering, but excluding the proceeds, if any, from the exercise of Series F Warrants and the Pre-Funded Warrants sold
in the offering. The Series F Warrants included in the Common Units and the Pre-Funded
Units are immediately exercisable at a price of $0.495 per share of common stock, subject to adjustment in certain circumstances,
and expire June 2, 2025. The shares of common stock, or Pre-Funded Warrants in the case of the Pre-Funded Units, and the Series
F Warrants were offered together, but the securities contained in the Common Units and the Pre-Funded Units were issued separately.
During the nine months ended September 30, 2020, 2,866,600 Series F Warrants were converted into 2,866,600 shares of common stock.
The net proceeds to the Company from exercise of the Series F Warrants were approximately $1.4 million. During the nine months ended September 30, 2020, the Company issued
a total of 14,586,400 shares of common stock in connection with the exercise of all outstanding Pre-Funded Warrants issued in June
2020.
Pursuant to the full ratchet anti-dilution adjustment provisions in the respective certificate of designation for the Company’s Series B Convertible Preferred Stock and Series C Preferred Stock, the conversion price of the outstanding shares of the Series B Convertible Preferred Stock and the Series C Preferred Stock was reduced to $0.45 per share, effective as of the date of the underwriting agreement entered for the June 2020 Offering, and the number of shares of common stock issuable upon conversion of the Series B Preferred Stock and the Series C Preferred Stock had increased as follows:
● An aggregate of 1,665,414 additional shares of common stock upon conversion of the Series B Preferred Stock and as payment of the dividends thereunder in common stock, based on 17,303 shares of Series B Preferred Stock outstanding as of June 2, 2020.
● An aggregate of 283,285 additional shares of common stock upon conversion of the Series C Preferred Stock, based on 26,558 shares of Series C Preferred Stock outstanding as of June 2, 2020.
For the purpose of calculating basic net loss per share, the additional shares of common stock that are issuable upon exercise of the Pre-funded Warrants have been included since the shares are issuable for a negligible consideration, as determined by the Company according to ASC 260-10-45-13, and have no vesting or other contingencies associated with them. The Company has also concluded that the series F warrants are classified as equity, since the warrants meet all criteria for equity classification.
c. During the nine months ended September 30, 2020, 32,027 shares of Series C Convertible Preferred Stock were converted into 372,173 shares of common stock.
d. During June 2020, the placement agent from the July 2016 Offering exercised its unit purchase option to purchase 1,976 units and received 1,976 shares of Series B Convertible Preferred Stock and 5 Series A warrants to purchase common stock. The placement agent subsequently converted its Series B Convertible Preferred Stock and received an aggregate of 253,587 shares of common stock. The Company received $81,510 from the placement agent for the exercise of the unit purchase option. As of September 30, 2020, there are no unit purchase options issued in July 2016.
e. During the three months ended September 30, 2020, the Company sold 593,102 shares of its common stock pursuant to its at-the-market (ATM) issuance sales agreement with MLV & Co. LLC. These sales resulted in net proceeds to the Company of approximately $158 thousand.
f.
On August 31, 2020 the Company granted to employees
and directors options to purchase a total of 1,094,594 shares of the Company’s common stock. The options have an exercise
prices of $0.39 per share, which was the fair market value of the Company’s common stock on the date of the grant. The options
are subject to a three-year vesting period, with one-third of such awards vesting each year. In calculating the fair value of the above
options the Company used the following assumptions: dividend yield of 0% and expected term of 5.5-6.5 years; expected volatility
of 127.71%-136.66%; and risk-free interest rate of 0.32%-0.42%. The fair value of the above options, using
the Black-Scholes option-pricing model, was approximately $382 thousand.
g.
On August 31, 2020, the Company granted 2,108,516
restricted shares of the Company’s common stock to employees and directors. The shares are subject to a three-year vesting
period, with one-third of such awards vesting each year. The fair value of the above restricted shares
was approximately $822 thousand.
h.
On August 31, 2020, the Company granted 1,175,287
restricted share units of the Company’s common stock to the chief executive officer. The shares are subject to a three-year
vesting period, with one-third of such awards vesting each year. The fair value of the above restricted shares
was approximately $458 thousand
i. As of September 30, 2020, the number of preferred shares and the amount each class is convertible into is below:
Number of Number of
Series B Convertible Preferred Stock 17,303 2,220,552 *
Series C Convertible Preferred Stock 2,343 33,322
Total 2,253,874 * Including the shares of common stock
the holders of Series B Convertible Preferred Stock are entitled to receive as cumulative dividends at the rate per share of 15%
per annum of the stated value for five years, payable in cash or common stock, at the Company’s discretion, but excluding
effect of future conversion price adjustment, if any. As of September 30, 2020, the Company
has outstanding warrants to purchase an aggregate of 26,705,502 shares of common stock as follows:
Number of Weighted
Series A Warrants 1,107 $ 8,750.00
Series B Warrants 2,448 $ 3,500.00
Series D Warrants 766,698 $ 15.00
Series E Warrants 2,972,221 $ 1.80
Series F Warrants 22,688,900 $ 0.50
Underwriter Warrants 274,029 $ 0.50
Other warrants 99 $ 21,993.00
Total Warrants 26,705,502 $ 1.82 As of September 30, 2020, the Company
had 155,000,000 authorized shares of capital stock, par value $0.0001 per share, of which 150,000,000 are shares of common stock
and 5,000,000 are shares of “blank check” preferred stock. In January 2020, the Company granted
its new chief executive officer and president 182,381 restricted stock units and stock options to purchase 60,794 shares of common
stock at $1.10 per share. The restricted stock units and options are subject to a three-year vesting period, with one-third of
such awards vesting each year. The fair value of the restricted stock
units was approximately $0.2 million. | NOTE 8 - EQUITY
a. Share capital The Company’s common stock are
listed on the NYSE American. On February 7, 2018, the Company filed
with the Secretary of State of Delaware a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation
to effect a one-for-thirty-five reverse stock split of its common stock, par value $0.0001 per share, effective as of February
7, 2018, which decreased the number of issued and outstanding shares of common stock and restricted stock as of December 31, 2017
from 1.5 million shares to 30 thousand shares (adjusted to 2019 Reverse Split). On March 27, 2019, the Company filed
with the Secretary of State of Delaware a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation
to effect a one-for-fifty reverse stock split of its common stock, par value $0.0001 per share, effective as of March 29, 2019,
which decreased the number of issued and outstanding shares of common stock and restricted stock as of December 31, 2018 from 38.4
million shares to 769 thousand shares. All related share and per share data
have been retroactively applied to the financial statements and their related notes for all periods presented. Status of Share Capital as of December
31, 2019 During 2018, the Company made multiple
transactions related to the capital structure. Following either redemption or conversion of the company’s preferred stock,
as of December 31, 2019, the Company has 17,303 shares of Series B Convertible Preferred Stock outstanding (convertible into 555,138
shares of common stock) out of 442,424 shares originally issued, 34,370 shares of Series C Convertible Preferred Stock outstanding
(convertible into 122,204 shares of common stock) out of 1,069,822 shares originally issued and no Series D Convertible Preferred
Stock outstanding. The respective certificate of designation for our Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock contains a full ratchet anti-dilution price protection to be triggered upon issuance of equity or equity-linked
securities at an effective common stock purchase price of less than the conversion price in effect, so the number of shares of
common stock issuable upon conversion of the Series B or C Convertible Preferred Stock could increase if another equity financing
is completed at a price lower than the current conversion price of $1.80 per share. Series D Convertible Preferred Stock
and amendments to existing preferred stock through December 31, 2017 in connection with the Series D Private Placement On December 1, 2017, as part of a planned
recapitalization, the Company sold shares of Series D Convertible Preferred Stock (“Series D Preferred Stock”) to an
institutional investor (“Series D Investor”) in a private placement pursuant to a securities purchase agreement (the
“SPA”), dated November 28, 2017, for aggregate gross proceeds of $750,000. The SPA contained a “most favored
nation” provision, which provided that, until the Company consummates a “Qualified Offering”, in the event the
Company undertakes, or enter into any agreement to undertake, the issuance and sale of common stock and/or common stock equivalents
to third party investors for cash (a “Subsequent Financing”), the Series D Investor may elect, in its sole discretion,
to exchange all or some of the Series D Preferred Stock then held by such investor for any securities or units issued in such Subsequent
Financing on a $1.00 per stated value for $1.00 new subscription amount basis (the “Series D Exchange Right”). The
surrender of Series D Preferred Stock was to be in lieu of any cash subscription amount required for the participation in such
Subsequent Financing. The Series D Investor also had the option to exchange their Series D Preferred Stock into the securities
issued in a Qualified Offering upon consummation of a Qualified Offering on a $1.00 per stated value for $1.00 new subscription
amount basis. The Company also agreed to use 12.5%
of the proceeds from any subsequent offering of the Company’s securities to redeem the outstanding shares of Series B Convertible
Preferred Stock owned by the Series D Investor until such time that the Company has redeemed, in the aggregate, at least $1 million
of Series B Convertible Preferred Stock, up to $1.5 million of stated value of Series B Convertible Preferred Stock (“Redemption
Obligation of Series B”). In addition, in accordance with the
original SPA, the certificate of designation for the Series B Convertible Preferred Stock was amended in December 2017 to provide
for an automatic exchange of each share of Series B Convertible Preferred Stock upon the consummation of a Qualified Offering subject
to the beneficial ownership limitation. Furthermore, the original SPA provided
that, upon the consummation of a Qualified Offering, the shares of Series C Convertible Preferred Stock owned by the Series D Investor
would be automatically exchanged into the securities sold by the Company in a Qualified Offering upon the terms set forth in the
Agreement. However, under the rules of the NYSE American, the Company was required to obtain shareholder approval for the exchange
by such purchaser of any securities in the Qualified Offering that represent 20% or more of the Company’s total shares of
common stock outstanding immediately prior to such offering. As of the date of the SPA, the Company
analyzed the classification of the Redemption Obligation of Series B of the Company regarding the Series B Convertible Preferred
Stock as agreed upon in the SPA. Based on ASC 480-10-S99 the Company determined that, as of the date of the SPA, since the Redemption
Obligation of Series B was outside of its control, the Series B Convertible Preferred Stock was considered as contingently redeemable
upon the occurrence of an event that is outside of its control and should be classified as a mezzanine equity. The Company determined
that, as of the date of the SPA, Subsequent Financing and the related payment of Redemption Obligation of Series B was considered
to be outside of the Company’s control. Accordingly, as of the date of the SPA, the redemption amount net of the embedded
derivative (as described below), which amounts to $934,000, was classified as “Redeemable Preferred Shares” in the
Consolidated Balance Sheet. In addition, as of the date of the
SPA, the Company analyzed whether the conversion feature embedded in the shares of the Series B Convertible Preferred Stock subject
to the Redemption Obligation of Series B should be bifurcated. As certain shares of the Series B Convertible Preferred Stock was
contingently redeemable as of the date of the SPA, the host contract was determined to be akin to debt, and the other criteria
under ASC 815-15-25-1 were met, an embedded derivative was separated from the host contract and accounted for as a derivative instrument
pursuant to Subtopic 815-10. As of the date of the SPA, the embedded derivative was valued at $66,000. Placement Agent Unit Purchase Option
Exercise and Series B Convertible Preferred Stock Conversion During January and February 2018, the
placement agent from the public offering that closed in July 2016 exercised its unit purchase option to purchase 13,508 units and
received 13,508 shares of Series B Preferred Stock and Series A warrants to purchase 31 shares of common stock. The placement agent
subsequently converted its Series B Preferred Stock and received an aggregate of 2,229 shares of common stock. We received an aggregate
of $557,205 from the placement agent for the exercise of the unit purchase option. Series D Amendments and 2018 Equity
Offerings On February 21, 2018, the SPA was amended
(“February 2018 SPA amendment”) to require the Company (i) to use 15% of the proceeds from any subsequent offering
of the Company’s securities that is not a Qualified Offering to redeem the outstanding shares of the Series C Convertible
Preferred Stock held by the Series D Investor at a per share purchase price equal to the stated value of the Series C Convertible
Preferred Stock, and (ii) upon closing of any subsequent offering that is a Qualified Offering, to exchange all remaining outstanding
shares of Series C Convertible Preferred Stock held by the Series D Investor for any securities issued in such Qualified Offering
on a $1.00 per stated value for $1.00 new subscription amount basis (subject to the beneficial ownership limitation set forth in
the certificate of designation for the Series C Convertible Preferred Stock). The February 2018 SPA amendment provided that in
the event that the Company fails, or is unable, to issue securities issued in the Qualified Offering to the Series D Investor in
exchange for such investor’s remaining Series C Convertible Preferred Stock due to limitations mandated by the NYSE American,
the Securities and Exchange Commission, or for any other reason, the Company would be required to offer to purchase from such investor
those shares of Series C Convertible Preferred Stock not exchanged for the securities sold in the Qualified Offering at a per share
purchase price equal to the stated value of Series C Convertible Preferred Stock. This requirement to purchase from the Series
D Investor those shares of Series C Convertible Preferred Stock not exchanged for the securities sold in the Qualified Offering
at a per share purchase price equal to the stated value of Series C Convertible Preferred Stock in case of a Qualified Offering,
and the requirement to use 15% of the proceeds from any subsequent offering of the Company’s securities that is not a Qualified
Offering to redeem the outstanding shares of the Series C Convertible Preferred Stock held by the Series D Investor at a per share
purchase price equal to the stated value of the Series C Convertible Preferred Stock are referred to as “Redemption Obligation
of Series C.” For accounting purposes, as of the
effective date of the February 2018 SPA amendment, the Company analyzed the classification of the Series C Convertible Preferred
Stock in light of the Redemption Obligation of Series C regarding such preferred stock held by the Series D Investor, as agreed
upon in the February 2018 SPA amendment. Based on ASC 480-10-S99 the Company determined that since the Redemption Obligation of
Series C may occur upon contingent events, such as subsequent financing transactions not meeting the threshold for a Qualified
Offering, that are not solely within the Company’s control, as of the effective date of the February 2018 SPA amendment the
Series C Convertible Preferred Stock was considered as contingently redeemable and should be classified outside of permanent equity,
within mezzanine equity. In addition, as of the effective date
of the February 2018 SPA amendment, the Company analyzed whether the conversion feature embedded in the shares of the Series C
Convertible Preferred Stock subject to the Redemption Obligation of Series C should be bifurcated. As certain shares of the Series
C Convertible Preferred Stock were contingently redeemable, as of the effective date of the February 2018 SPA amendment, the host
contract was determined to be akin to debt, and the conversion feature not clearly and closely to the debt host given the anti-dilution
protection included in the terms of these Series C Convertible Preferred Stock. Consequently, an embedded derivative was separated
from the host contract and accounted for as a derivative instrument pursuant to Subtopic 815-10. As of the effective date of the February
2018 SPA amendment, the Company classified an amount of $3,200,000 from permanent equity to “Redeemable Preferred Shares”
and “Derivative Liability” in an amount of $2,580,000 and $620,000, respectively. The Company values Level 3 derivative
liability using an internally developed valuation model, whose inputs include potential equity transactions probability of completing
successful fund raising during the relevant period and stock prices. On February 26, 2018, the Company and
the Series D Investor entered into a waiver agreement (the “Waiver Agreement”) which provided that (i) the Series D
Exchange Right, which was provided by the original SPA, would not be applicable to an offering of up to $7,000,000 which occurred
no later than March 9, 2018, (ii) the Company shall reduce the conversion price of the Series D Preferred Stock to the public offering
price of our common stock in such offering, and (iii) instead of using 15% of the proceeds from such offering to redeem shares
of Series C Convertible Preferred Stock held by the Series D Investor, which was provided by the February 2018 SPA amendment, the
Company was required to use 15% of the proceeds from such offering to redeem a portion of the outstanding shares of Series D Preferred
Stock held by the Series D Investor at a per share purchase price equal to the stated value of the Series D Preferred Stock. On March 1, 2018, the Company closed
an underwritten public offering of 20,000 shares (the “March 2018 Offering”) of the Company’s common stock. The
offering price to the public of the shares sold at the March 2018 Offering was $150.00 per share. The Company received gross proceeds
of $3.0 million from the offering, before deducting underwriter commissions and discounts and other fees and expenses payable by
the Company. In connection with the March 2018 Offering, the Company issued to the underwriter warrants to purchase up to 1,200
shares of common stock, or 6% of the number of shares of common stock sold in the March 2018 Offering (the “March Underwriter
Warrants”). The March Underwriter Warrants are exercisable at any time and from time to time, in whole or in part, following
the date of issuance and ending February 27, 2023, at a price per share equal to $187.50 (125% of the offering price to the public
per share). Pursuant to the SPA, as amended by
February 2018 SPA amendment and the Waiver Agreement, following the closing of the offering on March 1, 2018, the Company used
$450,000 (representing 15% of the gross proceeds from the March 2018 Offering) to purchase from the Series D Investor 450 shares
of the Series D Preferred Stock at a per share purchase price equal to the stated value of the Series D Preferred Stock. As a result of the March 2018 Offering,
the respective conversion price for each of the Series B Convertible Preferred Stock, the Series C Convertible Preferred Stock
and the Series D Preferred Stock was reduced to $150.00 per share, and the number of shares of common stock issuable upon conversion
of the Series B Convertible Preferred Stock, the Series C Convertible Preferred Stock and the Series D Preferred Stock had increased
as follows:
● an aggregate of 3,807 additional shares of common stock upon conversion of the Series B Convertible Preferred Stock and as payment of the dividends thereunder in common stock, based on 17,303 shares of Series B Convertible Preferred Stock outstanding as of March 1, 2018.
● an aggregate of 18,082 additional shares of common stock upon conversion of the Series C Convertible Preferred Stock, based on 741,651 shares of Series C Convertible Preferred Stock outstanding as of March 1, 2018.
● an aggregate of 2,857 additional shares of common stock upon conversion of the Series D Preferred Stock, based on 750 shares of Series D Preferred Stock outstanding as of March 1, 2018. For accounting purposes, as of the
closing of the March 2018 Offering, the Company analyzed whether the change in the conversion price of the Series D Preferred Stock
constitutes an extinguishment for accounting purposes, by comparing the fair value of the Series D Preferred Stock immediately
before and after such change in terms. Since the fair value increased substantially, i.e by more than 10%, the change in terms
was accounted for as an extinguishment. As a result, the difference between the fair value of the Series D Preferred Stock immediately
after the change in term (the reduction of the conversion price from $350.00 per share to $150.00 per share, pursuant to the SPA,
as amended by February 2018 SPA amendment and the Waiver Agreement) and the carrying amount immediately before such change, in
the amount of $49,000, was added to the basic loss per share attributable to the Company’s common stockholders. On March 28, 2018, the Company and
the Series D Investor entered into the second waiver agreement (the “Second Waiver Agreement”) which provided that
(i) the Series D Exchange Right, which was provided by the original SPA, would not be applicable to a subsequent financing consisting
solely of shares of common stock, which shall be publicly registered on Form S-3 for gross proceeds to us of up to $5,000,000,
to be consummated by not later than April 3, 2018 (the “Planned April 2018 Offering”), (ii) the Company’s obligation
to use 15% of the proceeds from any subsequent offering of our securities that is not a Qualified Offering to redeem the outstanding
shares of the Series C Convertible Preferred Stock held by the Series D Investor, which was provided by the February 2018 SPA amendment,
would not be applicable to the Planned April 2018 Offering, (iii) the Company shall reduce the conversion price of the Series D
Preferred Stock to the public offering price of our common stock sold in the Planned April 2018 Offering, and (iv) the Company
shall use $300,000 of the proceeds from the Planned April 2018 Offering to redeem outstanding shares of Series C Convertible Preferred
Stock held by the Series D Investor at a per share purchase price equal to the stated value of the Series C Convertible Preferred
Stock. On April 2, 2018, the Company closed
an underwritten public offering of 57,143 shares (the “April 2018 Offering”) of the Company’s common stock at
the offering price to the public of $87.50 per share. The Company received gross proceeds of $5.0 million from the offering, before
deducting underwriter discounts and commissions and other fees and expenses payable by the Company. In connection with the April 2018 Offering,
the Company issued to the underwriter warrants to purchase up to 3,429 shares of common stock, or 6% of the number of shares of
common stock sold in the April 2018 Offering (the “April Underwriter Warrants”). The April Underwriter Warrants are
exercisable at any time and from time to time, in whole or in part, following the date of issuance and ending March 28, 2023, at
a price per share equal to $109.38 (125% of the offering price to the public in the April 2018 Offering). Pursuant to the SPA, as amended by
the February 2018 SPA amendment, the Waiver Agreement and the Second Waiver Agreement, following the closing of the April 2018
Offering, the Company used $300,000 of the net proceeds of the offering to purchase from the Series D Investor 46,875 shares of
the Series C Convertible Preferred Stock at a per share purchase price equal to the stated value of the Series C Convertible Preferred
Stock. As a result of the April 2018 Offering,
the conversion price of the outstanding shares of Series D Preferred Stock was reduced to $87.50 pursuant to the Second Waiver
Agreement, and the number of shares of common stock issuable upon conversion of the Series D Preferred Stock increased by an aggregate
of 1,429 additional shares of common stock, based on 300 shares of Series D Preferred Stock outstanding as of April 2, 2018. For accounting purposes, as of the
closing of the April 2018 Offering, the Company analyzed whether the change in the conversion price of the Series D Preferred Stock
constituted an extinguishment for accounting purposes, by comparing the fair value of the Series D Preferred Stock immediately
before and after such change in terms. Since the fair value increased substantially, i.e by more than 10%, the change in terms
was accounted for as an extinguishment. As a result, the difference between the fair value of the Series D Preferred Stock immediately
after the change in term (the further reduction of the conversion price from $150.00 per share to $87.50 per share, pursuant to
the SPA, as amended by February 2018 SPA amendment, the Waiver Agreement and the Second Waiver Agreement) and the carrying amount
immediately before such change, in the amount of $32,000, was subtracted from the basic loss per share attributable to the Company’s
common stockholders. As of March 28, 2018, the date of the
underwriting agreement for the April 2018 Offering, the respective conversion price of the outstanding shares of Series B Convertible
Preferred Stock and Series C Convertible Preferred Stock was reduced to $87.50 pursuant to the anti-dilution adjustment provisions
of the Series B Convertible Preferred Stock and of the Series C Convertible Preferred Stock, and the number of shares of common
stock issuable upon conversion of the Series B Convertible Preferred Stock and the Series C Convertible Preferred Stock had increased
as follows:
● an aggregate of 4,759 additional shares of common stock upon conversion of the Series B Convertible Preferred Stock and as payment of the dividends thereunder in common stock, based on 17,303 shares of Series B Convertible Preferred Stock outstanding as of March 28, 2018.
● an aggregate of 13,766 additional shares of common stock upon conversion of the Series C Convertible Preferred Stock, based on 451,695 shares of Series C Convertible Preferred Stock outstanding as of March 28, 2018. On June 28, 2018, the Company and the
Series D Investor entered into a letter agreement (the “Letter Agreement”) which further amended the SPA to provide
that, notwithstanding anything to the contrary in the prior agreements, in the event the Company consummates a Qualified Offering
in which the Series D Investor and its affiliates invest at least $3 million, (i) instead of an automatic exchange of all outstanding
shares of Series C Convertible Preferred Stock held by the Series D Investor into securities issued in a Qualified Offering on
a $1.00 per stated value for $1.00 new subscription amount basis, all outstanding shares of Series C Convertible Preferred Stock
held by the Series D Investor will be redeemed at a per share purchase price equal to the stated value of the Series C Convertible
Preferred Stock, and (ii) all outstanding shares of Series D Preferred Stock will be redeemed at a per share purchase price equal
to the stated value of the Series D Preferred Stock. On June 29, 2018, the Company entered
into an underwriting agreement relating to an underwritten public offering (the “July 2018 Offering”) of (i) 217,029
common units (“Common Units”), with each Common Unit being comprised of one share of the Company’s common stock
and one Series D warrant (collectively, the “Series D Warrants”) to purchase one share of common stock and (ii) 449,640
pre-funded units (“Pre-Funded Units”), with each Pre-Funded Unit being comprised of one pre-funded warrant (collectively,
the “Pre-Funded Warrants”) to purchase one share of common stock and one Series D Warrant, which closed on July 3,
2018. The offering price to the public was $15.00 per Common Unit and $14.50 per Pre-Funded Unit. The Company also granted the
Underwriter a 30-day option to purchase up to an additional 100,000 shares of common stock at a purchase price of $14.50 per share
and/or up to 100,000 additional Series D Warrants to purchase 100,000 shares of common stock at a purchase price of $0.50 per Series
D Warrant, less the underwriting discounts and commissions of $1.015 per share and $0.035 per Series D Warrant. The Underwriter
exercised its option to purchase an additional 100,000 Series D Warrants to purchase 100,000 shares of common stock. Pursuant to the Letter Agreement, the
Company had revised its estimate as of June 30, 2018, of the expected timing of redemption of Series C Convertible Preferred stock
to the estimated closing date of the July 2018 Offering (July 3, 2018). As a result, the total of $438,000 (accretion of the redeemable
preferred shares) was recorded against Additional paid-in capital and added to basic loss per share attributable to the Company’s
common stockholders. The Series D Warrants included in the
Common Units and the Pre-Funded Units are immediately exercisable at a price of $15.00 per share of common stock, subject to adjustment
in certain circumstances, and expire five years from the date of issuance. Each Pre-Funded Warrant contained in
a Pre-Funded Unit is exercisable for 0.02 share of our common stock at an exercise price of $0.01 per share. The Pre-Funded Warrants
are immediately exercisable and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full. Pursuant to the full ratchet anti-dilution
adjustment provisions in the respective certificate of designation for the Company’s Series B Convertible Preferred Stock
and Series C Convertible Preferred Stock, the conversion price of the outstanding shares of the Series B Convertible Preferred
Stock and the Series C Convertible Preferred Stock was reduced to $15.00 per share, effective as of the date of the underwriting
agreement entered for the July 2018 Offering, and the number of shares of common stock issuable upon conversion of the Series B
Convertible Preferred Stock and the Series C Convertible Preferred Stock had increased as follows:
● an aggregate of 55,197 additional shares of common stock upon conversion of the Series B Convertible Preferred Stock and as payment of the dividends thereunder in common stock, based on 17,303 shares of Series B Convertible Preferred Stock outstanding as of June 29, 2018.
● an aggregate of 133,929 additional shares of common stock upon conversion of the Series C Convertible Preferred Stock, based on 378,840 shares of Series C Convertible Preferred Stock outstanding as of June 29, 2018. On July 2, 2018, the Company filed
with the office of the Secretary of State of the State of Delaware a Certificate of Amendment to Certificate of Designation of
Preferences, Rights and Limitations of Series B Convertible Preferred Stock which removed the provision providing for an automatic
exchange of all outstanding shares of Series B Convertible Preferred Stock into securities issued in a Qualified Offering on a
$1.00 per stated value for $1.00 new subscription amount basis upon a Qualified Offering. The Company received gross proceeds
of $9.8 million from the July 2018 Offering, before deducting underwriter discounts and commissions and other fees and expenses
payable by the Company. For the purpose of calculating basic
net loss per share, the additional shares of common stock that are issuable upon exercise of the Pre-funded Warrants have been
included since the shares are issuable for a negligible consideration, as determined by the Company according to ASC 260-10-45-13,
and have no vesting or other contingencies associated with them. Pursuant to the underwriting agreement
relating to the July 2018 Offering, the Company, upon closing of the July 2018 Offering, issued to the underwriter warrants to
purchase up to 40,000 shares of common stock, or 6% of the aggregate number of shares of common stock sold in the July 2018 Offering
(including the number of shares of common stock issuable upon exercise of the Pre-Funded Warrants sold in the July 2018 Offering).
The underwriter warrants are exercisable at any time and from time to time, in whole or in part, following the date of issuance
and ending July 3, 2023, at a price per share equal to $18.75 (125% of the offering price to the public per Common Unit). Pursuant to the Letter Agreement, on
July 3, 2018, upon closing of the July 2018 Offering, which was a Qualified Offering, the Company used $2,264,269 of the net proceeds
of the July 2018 Offering to redeem 306,917 shares of Series C Convertible Preferred Stock and 300 shares of Series D Preferred
Stock held by the Series D Investor. On April 8, 2019, the Company closed
an underwritten public offering of 486,957 shares of the Company’s common stock at the offering price to the public of $5.00
per share. The Company received net proceeds of approximately $2 million from the offering, after deducting underwriter discounts
and commissions and other fees and expenses payable by the Company. In connection with this public offering, on April 12, 2019,
the underwriter partially exercised its over-allotment option and purchased an additional 12,393 shares of our common stock at
a price to the public of $5.00 per share. The Company received net proceeds of approximately $47,000 from the exercise of the over-allotment
option. In connection with the offering, the
Company issued to the underwriter warrants to purchase up to 34,955 shares of common stock, or 7% of the shares sold in the offering,
including the shares issued pursuant to the over-allotment option (the “April 2019 Underwriter Warrants”). The April
2019 Underwriter Warrants are exercisable at any time and from time to time, in whole or in part, following the date of issuance
and ending on April 4, 2024, at an exercise price of $6.25 per share (125% of the offering price to the public per share). Upon execution of the underwriting
agreement, the respective conversion price of the outstanding shares of Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock was reduced to $5.00 pursuant to the anti-dilution adjustment provisions of the Series B Convertible Preferred
Stock and of the Series C Convertible Preferred Stock, and the number of shares of common stock issuable upon conversion of the
Series B Convertible Preferred Stock and the Series C Convertible Preferred Stock had increased as follows:
● an aggregate of 133,233 additional shares of common stock issuable upon conversion of the Series B Convertible Preferred Stock, including the payment of the cumulative dividends accrued thereunder in common stock, based on 17,303 shares of Series B Convertible Preferred Stock outstanding as of April 4, 2019.
● an aggregate of 50,708 additional shares of common stock issuable upon conversion of the Series C Convertible Preferred Stock, based on 59,423 shares of Series C Convertible Preferred Stock outstanding as of April 4, 2019.
On September 19, 2019, the Company entered
into an underwriting agreement relating to an underwritten public offering (the “September 2019 Offering”) of (i) 539,000
common units (“2019 Common Units”), with each 2019 Common Unit being comprised of one share of the Company’s
common stock and one Series E warrant (collectively, the “Series E Warrants”) to purchase one share of common stock
and (ii) 2,238,777 pre-funded units (“2019 Pre-Funded Units”), with each 2019 Pre-Funded Unit being comprised of one
pre-funded warrant (collectively, the “2019 Pre-Funded Warrants”) to purchase one share of common stock and one Series
E Warrant, which closed on September 24, 2019. The offering price to the public was $1.80 per 2019 Common Unit and $1.79 per 2019
Pre-Funded Unit. In connection with this public offering, on September 24, 2019, the underwriter partially exercised its over-allotment
option and purchased an additional Series E Warrants to purchase 194,444 shares of common stock at a purchase price of $0.01 per
Series E Warrant. The Series E Warrants included in the 2019
Common Units and the 2019 Pre-Funded Units are immediately exercisable at a price of $1.80 per share of common stock, subject to
adjustment in certain circumstances, and expire five years from the date of issuance.
Each 2019 Pre-Funded Warrant contained in a
2019 Pre-Funded Unit is exercisable for one share of our common stock at an exercise price of $0.01 per share. The 2019 Pre-Funded
Warrants are immediately exercisable and may be exercised at any time until all of the 2019 Pre-Funded Warrants are exercised in
full. In connection with the offering, the Company
issued to the underwriter warrants to purchase up to 194,444 shares of common stock, or 7% of the shares sold in the offering,
including the number of shares of common stock issuable upon exercise of the 2019 Pre-Funded Warrants sold in the offering (the
“September 2019 Underwriter Warrants”). The September 2019 Underwriter Warrants are exercisable at any time and from
time to time, in whole or in part, following the date of issuance and ending on September 19, 2024, at an exercise price of $2.25
per share (125% of the offering price to the public per 2019 Common Unit). Pursuant to the full ratchet anti-dilution
adjustment provisions in the respective certificate of designation for the Company’s Series B Convertible Preferred Stock
and Series C Preferred Stock, the conversion price of the outstanding shares of the Series B Convertible Preferred Stock and the
Series C |
