| Series A Convertible Preferred Stock, Stockholders' Deficit, and Warrants | Note 13 — Series A Convertible Preferred
Stock, Stockholders’ Deficit, and Warrants Preferred Stock The Company is authorized
to issue 20 million shares of its preferred stock, par value of $0.001 per share, with such designation, rights, and preferences
as may be determined from time-to-time by the Company’s board of directors. As of March 31, 2018, 975,568
shares of Series B Convertible Preferred Stock (classified in permanent equity) were issued and outstanding, as discussed below,
and as of December 31, 2017, there were 249,667 shares of Series A Convertible Preferred Stock (classified in temporary equity),
and 357,259 shares of Series A-1 Convertible Preferred Stock (classified in permanent equity), were each issued and outstanding. Previously, a total of 422,838
shares of Series A Convertible Preferred Stock and 422,838 Series A Warrants were issued in the three months ended March 31, 2017
in the “Series A Preferred Stock Units private placement”; and, 125,000 shares of Series A-1 Convertible Preferred
Stock and 125,000 Series A-1 Warrants were issued on August 4, 2017 in the “Series A-1 Preferred Stock Units private placement”
- as each private placement transaction is discussed herein below. On November 17, 2017 the
“Series A Exchange Offer” was completed, with such exchange offer made to 28 holders and accepted by 13 holders of
the Series A Convertible Preferred Stock and Series A Warrants, wherein: one share of Series A Convertible Preferred Stock was
exchanged for 1.5 shares of Series A-1 Convertible Preferred Stock, and, one Series A Warrant for one Series A-1 Warrant - referred
to herein as the “Series A Exchange Offer” and the “November 17, 2017 Exchange Date”. See Note 11, Financial
Instruments Fair Value Measurements On the November 17, 2017
Exchange Date: (i) 232,259 shares of Series A-1 Convertible Preferred Stock were issued upon the exchange of 154,837 shares of
Series A Convertible Preferred Stock, and 154,837 Series A-1 Warrants were issued upon the exchange of 154,837 Series A Warrants;
and, separately, in November and December 2017, a total of 18,334 shares of Series A Convertible Preferred Stock were converted
into a total of 22,093 shares of common stock - resulting in, as of December 31, 2017, 249,667 shares of Series A Convertible Preferred
Stock (classified in temporary equity), and 357,259 shares of Series A-1 Convertible Preferred Stock (classified in permanent equity),
and 268,001 Series A Warrants, and 279,837 Series A-1 Warrants - each issued and outstanding. On March 15, 2018, the “Series
A and Series A-1 Exchange Offer” was completed, with such exchange offer made to and accepted by all holders of both the
Series A Convertible Preferred Stock and Series A Warrants, and the Series A-1 Convertible Preferred Stock and Series A-1 Warrants,
wherein: one share of Series A Convertible Preferred Stock was exchanged for two shares of Series B Convertible Preferred Stock,
and one Series A Warrant exchanged for five Series Z Warrants; and one share of Series A-1 Convertible Preferred Stock exchanged
for 1.33 shares of Series B Convertible Preferred Stock, and one Series A-1 Warrant was exchanged for five Series Z Warrants -
referred to herein as the “Series A and Series A-1 Exchange Offer” and the “March 15, 2018 Exchange Date”.
See Note 11, Financial Instruments Fair Value Measurements On the March 15, 2018 Exchange
Date: (i) 975,568 shares of Series B Convertible Preferred Stock were issued upon the exchange of 249,667 shares of Series A Convertible
Preferred Stock and 357,259 shares of Series A-1 Convertible Preferred Stock; and, (ii) 2,739,190 Series Z Warrants were issued
upon the exchange of 268,001 Series A Warrants and 279,837 Series A-1 Warrants. Consequently, as a result
of the two exchange transactions and the conversions, as of March 31, 2018, there were no shares of Series A and Series A-1 Convertible
Preferred Stock, nor Series A and Series A-1 Warrants, and, 975,568 shares of Series B Convertible Preferred Stock (classified
in permanent equity) and 2,739,190 Series Z Warrants were issued and outstanding, each as discussed herein below. Series B Convertible
Preferred Stock As discussed above, as of
March 31, 2018, 975,568 shares of Series B Convertible Preferred Stock (classified in permanent equity) were issued and outstanding,
upon being issued on the March 15, 2018 Exchange Date, as discussed herein above. The Series B Convertible Preferred Stock has
a par value of $0.001 per share, no voting rights, a stated value of $3.00 per share, and is immediately convertible upon its issuance.
At the holders’ election, a share of Series B Convertible Preferred Stock is convertible into a number of shares of common
stock of the Company at a common stock conversion exchange factor equal to a numerator of $3.00 and a denominator of $3.00, with
such denominator not subject to further adjustment, except for the effect of stock dividends, stock splits or similar events affecting
the Company’s common stock. The Series B Convertible Preferred Stock shall not be redeemed for cash and under no circumstances
shall the Company be required to net cash settle the Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock
is equity-classified and measured at its issue date estimated fair value on the March 15, 2018 Exchange Date. See Note 11, Financial
Instruments Fair Value Measurements The Series B Convertible
Preferred Stock provides for dividends at a rate of 8% per annum based on the stated value of the Series B Convertible Preferred
Stock, with such dividends compounded quarterly, accumulate, and are payable in arrears upon being declared by the Company’s
board of directors. The Series B Convertible Preferred Stock dividends from April 1, 2018 through October 1, 2021 are payable-in-kind
(“PIK”) in additional shares of Series B Convertible Preferred Stock. The dividends may be settled after October 1,
2021, at the option of the Company, through any combination of the issuance of additional Series B Convertible Preferred Stock,
shares of common stock, and /or cash payment. As of March 31, 2018, Series B Convertible Preferred Stock dividends totaling $254,400
(inclusive of $243,994 of aggregate dividends through the March 15, 2018 Exchange Date related to the previously held and exchanged
Series A and Series A-1 Convertible Preferred Stock, with such amount transferred to the respective holders’ Series B Convertible
Preferred Stock dividend balances) or a payment-in-kind of 84,820 shares of Series B Convertible Preferred Stock, were cumulatively
earned, accumulated, and in arrears, as the Company’s board of directors had not declared such dividends payable, and, therefore,
such dividends are not recognized as a dividend payable liability in the unaudited condensed consolidated balance sheet until declared
by the Company’s board of directors. Notwithstanding, such dividends are included in the calculation of basic and diluted
net loss attributable to common stockholders. Series A Preferred Stock
Units Private Placement On January 26, 2017, the
Company entered into a Securities Purchase Agreement, wherein an aggregate of $3,000,000 of Series A Preferred Stock Units may
be issued at a price of $6.00 per unit in a private placement transaction (“Series A Preferred Stock Units private placement”).
At the Series A Preferred Stock Units private placement initial closing on January 26, 2017, and at subsequent closings on January
31, 2017 and March 8, 2017, a total of 422,838 Series A Preferred Stock Units were issued for aggregate gross proceeds of approximately
$2.5 million and net proceeds of approximately $2.2 million, after payment of placement agent fees and closing costs. The Series A Preferred Stock
Unit was comprised of one share of Series A Convertible Preferred Stock and one Series A Warrant. The Series A Convertible Preferred
Stock and Series A Warrants were immediately separable upon their issuance, and became convertible and exercisable, respectively,
on May 21, 2017 upon stockholder approval of the Series A Preferred Stock Units private placement, with such approval obtained
in accordance with Nasdaq Stock Market Rule 5635(d). At the election of their
respective holder, a share of Series A Convertible Preferred Stock was convertible into a number of shares of common stock of the
Company at a prescribed common stock exchange factor, and, a Series A Warrant is exercisable for one share of common stock of the
Company, or may be exchanged for four Series X Warrants, with each such Series X Warrant exercisable for one share of common stock
of the Company - each as more fully described below. The Series A Warrant and
the Series A Convertible Preferred Stock conversion option were each determined to be a derivative liability under ASC 815, as
discussed below. The issuance of the Series A Preferred Stock Units resulted in the recognition of a loss of $3,124,285, resulting
from the aggregate initial fair value of each of the Series A Warrant and the Series A Convertible Preferred Stock conversion option
derivative liability, being in excess of the gross proceeds of the Series A Preferred Stock Units private placement, with such
excess amounting to $2,735,657, recognized as a current period expense, along with offering costs of $388,628, which were also
recognized as a current period expense, as follows:
Series A
Preferred
Stock Units
Issue Dates
(Aggregate)
Series A Preferred Stock Units issuance gross proceeds $ 2,537,012
Less: Series A Warrants derivative liability initial fair value (4,050,706 )
Less: Series A Convertible Preferred Stock conversion option derivative liability initial fair value (1,221,963 )
Excess of initial fair value of derivative liabilities over gross proceeds (2,735,657 )
Offering costs of the issuance of the Series A Preferred Stock Units (388,628 )
Loss on issuance of Series A Preferred Stock Units $ (3,124,285 ) See Note 11, Financial Instruments
Fair Value Measurements, for information with respect to the initial issue date estimated fair value of each of the Series A Warrants
derivative liability and the Series A Convertible Preferred Stock conversion option derivative liability. The Company filed an effective
registration statement on Form S-1 (File No. 333-216963), declared effective June 23, 2017, (“the Series A Registration Statement”)
registering for resale the maximum number of the Company’s shares of common stock issuable upon conversion of the Series
A Convertible Preferred Shares and the exercise of the Series A Warrants, or if exchanged, the Series X Warrants. The Series A
Registration Statement also registers the resale of the Series X Warrants, and the initial issuance of the shares of common stock
of the Company underlying the Series X Warrants to the extent the Series X Warrants are publicly sold prior to the exercise of
such Series X Warrants. The Company timely filed the initial registration statement with the SEC on March 27, 2017, and such registration
statement became effective on June 23, 2017, with such dates consistent with the requirements of the registration rights agreement
entered into in connection with the Series A Preferred Stock Units private placement. If the Series A Registration Statement effectiveness
is not maintained, then, the Company is required to make payments to the investors of 2% of their Series A Preferred Stock Units
subscription amount on the date of such event, and every thirty days thereafter until the effectiveness is cured. Series A Convertible Preferred
Stock As of March 31, 2018 and
December 31, 2017, there were zero and 249,667, respectively, shares of Series A Convertible Preferred Stock issued and outstanding,
as discussed above, summarized for the periods noted as follows:
Series A
Convertible
Preferred Series A
Stock Warrants
Issued and outstanding as of December 31, 2017 249,667 268,001
Series A and Series A-1 Exchange Offer - March 15, 2018 (249,667 ) (268,001 )
Issued and outstanding as of March 31, 2018 — —
Series A
Convertible
Preferred Series A
Stock Warrants
Issued and outstanding as of December 31, 2016 — —
Issued in Series A Preferred Stock Units private placement 422,838 422,838
Series A Exchange Offer - November 17, 2017 (154,837 ) (154,837 )
Conversion of Series A Convertible Preferred Stock (18,334 ) —
Issued and outstanding as of December 31, 2017 249,667 268,001 As the Series A Convertible Preferred Stock
and the Series A Warrants were first issued in the Series A Preferred Stock Units private placement during the three months ended
March 31, 2017, there were no comparable amounts for the prior year ended December 31, 2016. The Series A Convertible
Preferred Stock, classified in temporary equity in the unaudited condensed consolidated balance sheet, has a par value of $0.001
per share, no voting rights, a stated value of $6.00 per share, and became convertible on May 21, 2017 upon stockholder approval
of the Series A Preferred Stock Units private placement, with such approval obtained in accordance with Nasdaq Stock Market Rule
5635(d). The Series A Convertible Preferred Stock has a carrying value of $0 resulting from the issuance date initial fair values
of the Series A Warrant derivative liability and the Series A Convertible Preferred Stock conversion option derivative liability
being in excess of the Series A Preferred Stock Units private placement issuance gross proceeds, with such excess recognized as
a current period loss in the unaudited condensed consolidated statement of operations, as discussed above. At the holders’ election,
a share of Series A Convertible Preferred Stock was convertible into a number of shares of common stock of the Company at a common
stock conversion exchange factor equal to a numerator of $6.00 and a denominator currently set at $4.97, with such denominator
subject to further adjustment by a prescribed formula should any subsequent issuances by the Company of common stock, or securities
convertible into common stock, be at a price lower than such denominator immediately prior to such new issuance. Previously, at
issuance, the Series A Convertible Preferred Stock common stock conversion exchange factor denominator was initially $6.00, and
was subsequently adjusted to $5.00 upon the issuance of the Series S Warrants on July 3, 2017, then to $4.99 upon the issuance
of the Series A-1 Preferred Stock Units on August 4, 2017, and then to $4.97 upon the issuance of Series A-1 Convertible Preferred
Stock and Series A-1 Warrants on the November 17, 2017 Exchange Date of the Series A Exchange Offer. The Series A Convertible
Preferred Stock conversion option is accounted for as a bifurcated derivative liability under FASB ASC 815, as along with other
provisions, the Series A Convertible Preferred Stock common stock exchange factor denominator, as discussed above, is subject to
potential adjustment resulting from future financing transactions, under certain conditions. The Series A Convertible Preferred
Stock conversion option derivative liability is classified as a current liability on the balance sheet, initially measured at fair
value at the time of issuance, and subsequently remeasured at fair value at each reporting period, with changes in its fair value
recognized as other income or expense in the statement of operations. Upon the occurrence of an event resulting in the Series A
Convertible Preferred Stock conversion option derivative liability to be subsequently derecognized, its fair value will first be
adjusted on such date, with the fair value adjustment recognized as other income or expense, and then such derivative liability
will be derecognized. See Note 11, Financial Instruments Fair Value Measurements The Series A Convertible
Preferred Stock provided for dividends at a rate of 8% per annum based on the stated value of the Series A Convertible Preferred
Stock, with such dividends compounded quarterly, accumulate, and are payable in arrears upon being declared by the Company’s
board of directors. The Series A Convertible Preferred Stock dividends from April 1, 2017 through April 1, 2021 were payable-in-kind
(“PIK”) in additional shares of Series A Convertible Preferred Stock. Upon the closing of the Series A and Series A-1
Exchange Offer, cumulative aggregate Series A Convertible Preferred Stock dividends of $139,058 were transferred to the respective
holders’ Series B Convertible Preferred Stock dividend balances, with such balance transferred inclusive of $26,487 earned
for the period January 1, 2018 through the March 15, 2018 Exchange Date. As of March 31, 2017, $26,440 of Series A Convertible
Preferred Stock dividends were earned. The Series A Convertible Preferred Stock dividends for each respective period were earned,
accumulated, and in arrears, as the Company’s board of directors had not declared such dividends payable, and, therefore,
such dividends are not recognized as a dividend payable liability in the unaudited condensed consolidated balance sheet until declared
by the Company’s board of directors. Notwithstanding, the Series A Convertible Preferred Stock dividends for each of the
period January 1, 2018 to March 15, 2018 and for the three months ended March 31, 2017, are included in the calculation of basic
and diluted net loss attributable to common stockholders for each respective period. In the event of a Deemed
Liquidation Event, as defined in the Certificate of Designation of Preferences, Rights, and Limitations of the Series A Convertible
Preferred Stock, the Series A Convertible Preferred Stock can become redeemable at the election of at least two-thirds of holders
of the then number of issued and outstanding Series A Convertible Preferred Stock, if the Company fails to effect a dissolution
of the Company under the Delaware General Corporation Law within ninety (90) days after such Deemed Liquidation Event. In the event
of any voluntary or involuntary liquidation, dissolution, or winding up of the Company or a Deemed Liquidation Event, as defined,
the holders of the Series A Convertible Preferred Stock then outstanding are entitled to be paid out the assets of the Company
available for distribution to its stockholders before any payment shall be made to the holders of the common stock, an amount per
share equal to the greater of (i) the stated value, plus any dividends accrued but unpaid, or (ii) such amount per share as would
have been payable had all the shares of Series A Convertible Preferred Stock been converted into shares of common stock prior to
such liquidation, dissolution, winding up, or Deemed Liquidation Event, as defined. As the Deemed Liquidation Event, as defined,
is a contingent event, the Series A Convertible Preferred Stock is classified outside of stockholders’ equity in temporary
(“mezzanine”) equity. Further, as the Series A Convertible Preferred Stock is not currently redeemable and redemption
is not probable, as a Deemed Liquidation Event, as defined, has not occurred and is not probable, the Series A Convertible Preferred
Stock will not be measured at fair value until such time as a redemption trigger occurs which causes redemption to be probable. Series A-1 Preferred Stock
Units Private Placement On August 4, 2017, the Company
entered into a Securities Purchase Agreement pursuant to which the Company may issue up to an aggregate of $600,000 (subject to
increase) of Series A-1 Preferred Stock Units at a price of $4.00 per unit, in a private placement transaction (Series A-1 Preferred
Stock Units private placement). On the August 4, 2017 closing date (“Series A-1 Close Date”) of the Series A-1 Preferred
Stock Units private placement, a total of 125,000 Series A-1 Preferred Stock Units were issued for cash proceeds of $500,000 -
the Company did not incur placement agent fees in connection with the August 4, 2017 closing. The Series A-1 Preferred
Stock Unit was comprised of one share of Series A-1 Convertible Preferred Stock and one Series A-1 Warrant - as more fully described
below. At their issuance, the Series A-1 Convertible Preferred Stock and the Series A-1 Warrant were immediately separable, and
each was immediately convertible and exercisable, respectively. At the election of their
respective holder, a share of Series A-1 Convertible Preferred Stock is convertible into one share of common stock of the Company
at a prescribed common stock exchange factor, and, a Series A-1 Warrant is exercisable for one share of common stock of the Company,
or may be exchanged for four Series X-1 Warrants or five Series W Warrants, with each such warrant exercisable for one share of
common stock of the Company - each as more fully described herein below. On October 18, 2017, the
Series A-1 Convertible Preferred Stock holders unanimously approved Amendment No. 1 to Series A-1 Preferred Stock Units private
placement transaction documents (“Series A-1 Amendment No. 1), wherein: a Series A-1 Warrant may be exchanged for four Series
X-1 Warrants, or additionally, exchanged for five Series W Warrants. See herein below for a discussion of the expense recognized
resulting from the Series A-1 Amendment No. 1 modification to provide for the additional exchange of one Series A-1 Warrant for
five Series W Warrants. The Series X-1 Warrants replaced the previous election to exchange one Series A-1 Warrant for four Series
X Warrants. The Series X-1 Warrants are substantively equivalent to the Series X Warrants with respect to material contractual
terms and conditions, including the same $6.00 per share exercise price, and dates of exercisability and expiry. The Series X-1
Warrant also confirms such warrants are not subject to redemption, and under no circumstances will the Company be required to net
cash settle the Series X-1 Warrants, for any reason, nor to pay any liquidated damages or other payments, resulting from a failure
to satisfy any obligations under the Series X-1 Warrant, notwithstanding such provisions were applicable to the Series X Warrant
through the operation of the Securities Purchase Agreement of the Series A-1 Preferred Stock Units private placement. See herein
below for a discussion of the Series X-1 Warrants or Series W Warrants issued upon exchange of a Series A-1 Warrant. Additionally, the Series
A-1 Amendment No. 1 removed the requirement for the Company to file an initial registration statement within sixty days of the
Series A-1 Close Date. Further, on December 29, 2017, the Series A-1 Convertible Preferred Stock holders unanimously approved Amendment
No.2 to Series A-1 Preferred Stock Units private placement transaction documents (“Series A-1 Amendment No. 2), wherein,
the due date for an effective registration statement was changed to 210 days from 150 days of the Series A-1 Close Date - see below
for further information with respect to the “Series A-1 Registration Statement” on Form S-1 (File 333-222234), declared
effective on January 8, 2018. The Series A-1 Preferred
Stock Units private placement cash proceeds of $500,000 were allocated as $189,550 to the Series A-1 Convertible Preferred Stock
and $310,450 to the Series A-1 Warrants, based on their respective relative fair value. The issue-date fair value of the Series
A-1 Convertible Preferred Stock was estimated using a combination of the Series A-1 Convertible Preferred Stock’s present
value of its cash flows using a required rate of return determined through a synthetic credit rating analysis and the Black-Scholes
valuation model; and the fair value of the Series A-1 Warrants was estimated using a Black-Scholes valuation model and assuming
the exchange of one Series A-1 Warrant for four Series X Warrants, using the following assumptions:
Issue
Series A-1 Convertible Preferred Stock Date
Allocated fair value $ 189,550
Shares of Series A-1 Convertible Preferred Stock 125,000
Required rate of return 27.0 %
Common stock conversion factor numerator $ 4.00
Common stock conversion factor denominator $ 4.00
Value of common stock $ 2.98
Expected term (years) 6.74
Volatility 52 %
Risk free rate 2.0 %
Dividend yield 0 %
Issue
Series A-1 Warrants Date
Allocated fair value $ 310,450
Exercise price per share - Series X Warrants $ 6.00
Value of common stock $ 2.98
Expected term (years) 6.74
Volatility 52 %
Risk free rate 2.0 %
Dividend yield 0 % The Company filed a registration
statement on Form S-1 (File No. 333-222234), declared effective January 8, 2018, (“the Series A-1 Registration Statement”)
registering for resale the maximum number of the Company’s shares of common stock issuable upon conversion of the Series
A-1 Convertible Preferred Shares and the exercise of the Series A-1 Warrants, or if exchanged, the Series X-1 Warrants or Series
W Warrants (as discussed below). Such registration statement also registers the resale of the Series X-1 Warrants or Series W Warrants,
and the initial issuance of the shares of common stock of the Company underlying the Series X-1 Warrants or Series W Warrants to
the extent the Series X-1 Warrants or Series W Warrants are publicly sold prior to the exercise of such Series X Warrants. The
Series A-1 Registration Statement January 8, 2018 effectiveness date was consistent with the requirements of the registration rights
agreement, as amended, entered into in connection with the Series A-1 Preferred Stock Units private placement. If the Series A-1
Registration Statement effectiveness is not maintained, then, the Company is required to make payments to the investors of 2% of
their Series A-1 Preferred Stock Units subscription amount on the date of such events, and every thirty days thereafter until the
effectiveness is cured. Series A-1 Convertible
Preferred Stock As of March 31, 2018 and
December 31, 2017, there were zero and 357,259, respectively, shares of Series A-1 Convertible Preferred Stock issued and outstanding,
as discussed above, summarized for the periods noted as follows:
Series A-1
Convertible
Preferred Series A-1
Stock Warrants
Issued and outstanding as of December 31, 2017 357,259 279,837
Series A and Series A-1 Exchange Offer - March 15, 2018 (357,259 ) (279,837 )
Issued and outstanding as of March 31, 2018 — —
Series A-1
Convertible
Preferred Series A-1
Stock Warrants
Issued and outstanding as of December 31, 2016 — —
Issued in Series A Preferred Stock Units private placement 125,000 125,000
Series A Exchange Offer - November 17, 2017 232,259 154,837
Converted to shares of common stock — —
Issued and outstanding as of December 31, 2017 357,259 279,837 As the Series A-1 Convertible Preferred
Stock and the Series A-1 Warrants were first issued in the Series A-1 Preferred Stock Units private placement on August 4, 2017,
there were no comparable amounts for the prior year ended December 31, 2016. The Series A-1 Convertible
Preferred Stock was classified in permanent equity in the unaudited condensed consolidated balance sheet, had a par value of $0.001
per share, no voting rights, a stated value of $4.00 per share, and was immediately convertible upon its issuance. At the holders’ election,
a share of Series A Convertible Preferred Stock was convertible into one share of common stock of the Company at a common stock
conversion exchange factor equal to a numerator of $4.00 and a denominator of $4.00, with such denominator not subject to further
adjustment, except for the effect of stock dividends, stock splits or similar events affecting the Company’s common stock.
The Series A-1 Convertible Preferred Stock shall not be redeemed for cash and under no circumstances shall the Company be required
to net cash settle the Series A-1 Convertible Preferred Stock. As discussed above, the Series
A-1 Preferred Stock Units private placement cash proceeds allocated to the Series A-1 Convertible Preferred Stock of $189,550 resulted
in an effective conversion price below the issue-date fair value of the underlying shares of common stock, resulting in a $182,500
beneficial conversion feature, which was accounted for as an implied discount on the Series A-1 Convertible Preferred Stock. The
Series A-1 Convertible Preferred Stock does not have a stated redemption date and was immediately convertible upon issuance, resulting
in the full accretion of the beneficial conversion feature as a deemed dividend paid to the Series A-1 Convertible Preferred Stock
on the August 4, 2017 issue date, with such deemed dividend included as a component of net loss attributable to attributable to
common stockholders. The Series A-1 Convertible
Preferred Stock provided for dividends at a rate of 8% per annum on the stated value of the Series A-1 Convertible Preferred Stock,
with such dividends compounded quarterly, accumulate, and are payable in arrears upon being declared by the Company’s board
of directors. The Series A-1 Convertible Preferred Stock dividends from October 1, 2017 through October 1, 2021 were payable-in-kind
(“PIK”) in additional shares of Series A-1 Convertible Preferred Stock. Upon the closing of the Series A and Series
A-1 Exchange Offer, cumulative aggregate Series A-1 Convertible Preferred Stock dividends of $104,936 were transferred to the respective
holders’ Series B Convertible Preferred Stock dividend balances, with such balance transferred inclusive of $25,148 earned
for the period January 1, 2018 through the March 15, 2018 Exchange Date. The were no Series A-1 Convertible Preferred Stock dividends
earned as of March 31, 2017. The Series A-1 Convertible Preferred Stock dividends for each respective period were earned, accumulated,
and in arrears, as the Company’s board of directors had not declared such dividends payable, and, therefore, such dividends
are not recognized as a dividend payable liability in the unaudited condensed consolidated balance sheet until declared by the
Company’s board of directors. Notwithstanding, the Series A-1 Convertible Preferred Stock dividends for each of the period
January 1, 2018 to March 15, 2018 and for the three months ended March 31, 2017, are included in the calculation of basic and diluted
net loss attributable to common stockholders for each respective period. Common Stock The Company is authorized
to issue 50,000,000 shares of common stock with a par value of $0.001 per share. As of March 31, 2018 and
December 31, 2017, there were 17,509,654 and 14,551,234 shares of common stock issued and outstanding, respectively, summarized
as follows:
Common
Stock
Issued and outstanding as of December 31, 2017 14,551,234
Issue - underwritten public offering 2,649,818
Exercises of Series W Warrants 34,345
Exercises of Series S Warrants 274,257
Issued and outstanding as of March 31, 2018 17,509,654
Issued and outstanding as of December 31, 2016(1) 13,330,811
Exercises of Series W Warrants 12,250
Exercises of Series S Warrants 1,186,080
Conversion of Series A Convertible Preferred Stock 22,093
Issued and outstanding as of December 31, 2017 14,551,234
(1) Prior to the Company’s initial public offering (IPO), as discussed below, a total of 12,250,000 shares of common stock were issued and outstanding.
● Under a registration statement on Form S-1 (File No. 333-203569) declared effective January 29, 2016, the Company’s initial public offering (IPO) was consummated on April 28, 2016, resulting in $4.2 million of net cash proceeds, after deducting cash selling agent discounts and commissions and offering expenses, from the issuance of 1,060,000 units at an offering price of $5.00 per unit, with each such unit comprised of one share of common stock of the Company and one warrant to purchase a share of common stock of the Company, with such warrant referred to as a “Series W Warrant” - see below for a discussion of the Series W Warrant. The Company estimated the fair value of its common stock issued in the IPO using the guideline transaction method of the market approach and arrived at an estimated fair value of common stock of $3.50.
● In January 2018, the Company conducted an underwritten public offering of shares of common stock of the Company pursuant to its previously filed and effective shelf registration statement on SEC Form S-3 (File No. 333-220549), declared effective October 6, 2017, along with a corresponding prospectus supplement dated January 19, 2018. On January 19, 2018, the Company entered into an underwriting agreement with Dawson James Securities, Inc., as sole underwriter, under which the company agreed to issue to the underwriter at $1.80 per share, 2,415,278 shares of common stock on a firm commitment basis and up to an additional 362,292 shares solely to cover underwriter over-allotments, if any, at the option of the underwriter, exercisable within 45 calendar days from January 19, 2018. The C |
