| Stockholders' Equity | NOTE 6 - STOCKHOLDERS’ EQUITY On September 15, 2017, the Company amended
its Amended and Restated Certificate of Incorporation to authorize the issuance of up to 225,000,000 shares of common stock, $0.001
par value per share, and 15,000,000 shares of preferred stock, $0.001 par value per share. Effective March 23, 2018, all common share
amounts and per share amounts have been adjusted to reflect a 1-for-10 reverse stock split. As of September 30, 2018, the Company had 5,734,639
shares of common stock and 5,960 shares of Series A convertible preferred stock issued and outstanding. Each share of the Company’s
common stock is entitled to one vote, and all shares rank equally as to voting and other matters. Each share of Series A preferred
stock is convertible by the holder into 250 shares of common stock at a conversion price of $4.00 per share; subject to adjustment
for stock splits, stock dividends, subsequent rights offerings, pro rata distributions, and fundamental transactions. Holders are
entitled to receive, and the Company shall pay, dividends on outstanding shares of Series A preferred stock, on an as-if-converted-to-common-stock
basis, equal to and in the same form as dividends actually paid on outstanding common shares when, as and if such dividends are
paid on outstanding common shares. Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary,
the holders of Series A preferred stock shall be entitled to receive out of the assets, whether capital or surplus, of the Company
the same amount that a holder of common stock would receive if the Series A preferred stock were fully converted to common stock,
which amounts shall be paid pari passu with all common shareholders. Holders of Series A preferred stock have no voting rights.
However, as long as any shares of Series A preferred stock are outstanding, the Company shall not, without the affirmative vote
of the holders of a majority of the then outstanding shares of Series A preferred stock, (a) alter or change adversely the powers,
preferences or rights given to the Series A preferred stock or alter or amend the applicable Certificate of Designation, (b) amend
the Company’s certificate of incorporation or other charter documents in any manner that adversely affects any rights of
the holders of Series A preferred stock, (c) increase the number of authorized shares of Series A preferred stock, or (d) enter
into any agreement with respect to any of the foregoing. Aspire Capital Financing Arrangement On May 4, 2017, the Company entered into a
common stock purchase agreement with Aspire Capital Fund, LLC (“Aspire Capital”) (the “2017 Aspire Purchase Agreement”),
which provides that upon the terms and conditions set forth therein, Aspire Capital is committed to purchase up to an aggregate
of $6.5 million shares of the Company’s common stock over the 30-month term of the 2017 Aspire Purchase Agreement. On any
trading day on which the closing sale price of the Company’s common stock exceeds $2.50 per share, the Company has the right,
in its sole discretion, to present Aspire Capital with a purchase notice, directing Aspire Capital (as principal) to purchase up
to 10,000 shares of the Company’s common stock per trading day, for up to $6.5 million of the Company’s common stock
in the aggregate at a per share price, calculated by reference to the prevailing market price of the Company’s common stock
(as provided in the 2017 Aspire Purchase Agreement); provided, however, that (subject to limited exceptions) the total number of
shares that may be sold pursuant to the 2017 Aspire Purchase Agreement will be limited to 284,242 shares, which represents 19.99%
of our outstanding shares of common stock as of May 2, 2017, unless stockholder approval or an exception pursuant to the rules
of Nasdaq is obtained to issue more than 19.99% of our outstanding shares as of May 2, 2017. As a condition to the 2017 Aspire Purchase
Agreement, the Company issued 13,732 shares of its common stock to Aspire Capital as a commitment fee. As of September 30, 2018,
no shares of common stock have been sold to Aspire Capital under the 2017 Aspire Purchase Agreement. October 2017 Public Offering On October 3, 2017, the Company closed a public
offering, selling an aggregate of (i) 3,455,000 Class A Units consisting of 3,455,000 shares of the Company’s common stock
and warrants to purchase 3,455,000 shares of the Company’s common stock at a public offering price of $4.00 per unit, and
(ii) 9,180 Class B Units consisting of 9,180 shares of Series A convertible preferred stock, with a stated value of $1,000 per
unit, and convertible into an aggregate of 2,295,000 shares of the Company’s common stock, and warrants to purchase an aggregate
of 2,295,000 shares of the Company’s common stock. The securities were offered by the Company pursuant to a registration
statement filed with the SEC that was declared effective on September 28, 2017. The final prospectus relating to the offering was
filed with the SEC on October 2, 2017. The warrants have an exercise price of $4.40,
are exercisable upon issuance and expire five years from the date of issuance. The warrant agreements provide for an adjustment
to the number of common shares issuable under the warrants and/or adjustment to the exercise price, including but not limited to,
if: (a) the Company issues shares of common stock as a dividend or distribution to holders of its common stock; (b) the Company
subdivides or combines its common stock; or (c) the Company issues new securities at a price less than the exercise price of the
warrants. The Company granted the underwriters a 45-day
option to purchase an additional 862,500 shares of the Company’s common stock and/or warrants to purchase an additional 862,500
shares of the Company’s common stock. At the closing of the offering, the underwriters exercised their over-allotment option
for warrants to purchase 297,500 shares of the Company’s common stock. Aggregate gross proceeds to the Company from
the public offering were approximately $23.0 million. The Company paid underwriting discounts and commissions of approximately
$1.6 million in connection with the offering, and approximately $0.4 million of other expenses in connection with the offering. The Company early adopted the provisions of
ASU 2017-11 in recognizing the warrants. As a result, the exercise price reset provisions were excluded from the assessment of
whether the warrants are considered indexed to the Company’s own stock. The warrants otherwise meet the requirements for
equity classification, and as such were initially classified in Stockholders’ Equity. The Company will recognize the value
of the exercise price reset provision if and when it becomes triggered, by recognizing the value of the effect of the exercise
price reset as a deemed dividend and a reduction of income available to common shareholders in computing basic earnings per share. The proceeds received in the October 2017 Public
Offering were allocated to each instrument on a relative fair value basis. Total proceeds of $23.0 million were allocated as follows:
$10.1 million to warrants issued, $7.8 million to Common Stock, and $5.1 million to Series A convertible preferred stock. The allocation
resulted in an effective conversion price for the Series A preferred stock that was below the quoted market price of the Company’s
common stock on the closing date. As such, the Company recognized a beneficial conversion feature equal to the intrinsic value
of the conversion feature on the closing date, resulting in a deemed dividend for the Series A convertible preferred stock of approximately
$3.1 million recognized on the closing date. In the nine-month period ended September 30,
2018, holders of 3,180 shares of Series A convertible preferred stock converted their shares of preferred stock into an aggregate
of 795,000 shares of common stock at the stated conversion price of $4.00 per share. |
