| Stockholders' (Deficit) | (10) StockholdersÂ’ (Deficit) Preferred Stock We are authorized
to issue 1,000,000 shares of preferred stock with a par value of $0.01. Of the 1,000,000 shares of preferred stock:
1) 20,000 shares have been designated as Series A Junior Participating Preferred Stock (“ Junior A
2) 313,960 shares have been designated as Series A Convertible Preferred Stock (“ Series A
3) 279,256 shares have been designated as Series B Convertible Preferred Stock (“ Series B
4) 88,098 shares have been designated as Series C Convertible Preferred Stock (“ Series C
5) 850 shares have been designated as Series D Convertible Preferred Stock (“ Series D
6) 500 shares have been designated as Series E Convertible Preferred Stock (“Series E”)
7) 240,000 shares have been designated as Series G Convertible Preferred Stock (“ Series G
8) 10,000 shares have been designated as Series H Convertible Preferred Stock (“ Series H
9) 21 shares have been designated as Series H2 Convertible Preferred Stock (“ Series H2
10) 6,250 shares have been designated as Series J Convertible Preferred Stock (“ Series J
11) 15,000 shares have been designated as Series K Convertible Preferred Stock (“ Series K As of December
31, 2015 and 2014, there were no shares of Junior A, and Series A, B, C, E, and H1 issued and outstanding. Series D Convertible
Preferred Stock On November 11,
2011, we completed a registered direct offering, pursuant to which we sold an aggregate of 843 units for a purchase price of $1,000
per unit, resulting in gross proceeds to us of $843,000 (the “ Series D Series
D Unit Series
D Convertible Preferred Stock Series D Warrant The proceeds from
the sale of each Series D Unit were allocated between the Series D Convertible Preferred Stock and the Series D Warrants based
on the residual method. The estimated fair value of the Series D Warrants was determined using a binomial formula, resulting in
an allocation of the gross proceeds of $283,725 to the total warrants issued. The allocation of the gross proceeds to the Series
D Convertible Preferred Stock was $559,275. In accordance with the provisions of ASC 470-20, an additional adjustment between Additional
Paid in Capital and Accumulated Deficit of $530,140 was recorded to reflect an implicit non-cash dividend related to the allocation
of proceeds between the stock and warrants issued. The $530,140 represents the value of the adjustment to additional paid in capital
related to the beneficial conversion feature of the Series D Convertible Preferred Stock. The value adjustment was calculated by
subtracting the fair market value of the underlying common stock on November 10, 2011 issuable upon conversion of the Series D
Convertible Preferred Stock from the fair market value of the Series D Convertible Preferred Stock as determined when the Company
performed a fair market value allocation of the proceeds to the Series D Convertible Preferred Stock and warrants. The warrants
are recorded as a liability. See “Warrant Derivative Liability” below. The Series D Convertible
Preferred Stock will rank senior to the CompanyÂ’s common stock and Series C Convertible Preferred Stock with respect to payments
made upon liquidation, winding up or dissolution. Upon any liquidation, dissolution or winding up of the Company, after payment
of the CompanyÂ’s debts and liabilities, and before any payment is made to the holders of any junior securities, the holders
of Series D Convertible Preferred Stock will first be entitled to be paid $1,000 per share subject to adjustment for accrued but
unpaid dividends. We may not pay
any dividends on shares of common stock unless we also pay dividends on the Series D Convertible Preferred Stock in the same form
and amount, on an as-if-converted basis, as dividends actually paid on shares of our common stock. Except for such dividends, no
other dividends may be paid on the Series D Convertible Preferred Stock. Each share of Series
D Convertible Preferred Stock is convertible into 1,538.46 shares of common stock (based upon an initial conversion price of $0.65
per share) at any time at the option of the holder, subject to adjustment for stock splits, stock dividends, combinations, and
similar recapitalization transactions (the “ Series D In addition, in
the event we consummate a merger or consolidation with or into another person or other reorganization event in which our shares
of common stock are converted or exchanged for securities, cash or other property, or we sell, lease, license or otherwise dispose
of all or substantially all of our assets or we or another person acquire 50% or more of our outstanding shares of common stock,
then following such event, the holders of the Series D Convertible Preferred Stock will be entitled to receive upon conversion
of the Series D Convertible Preferred Stock the same kind and amount of securities, cash or property which the holders of the Series
D Convertible Preferred Stock would have received had they converted the Series D Convertible Preferred Stock immediately prior
to such fundamental transaction. The holders of
Series D Convertible Preferred Stock are not entitled to vote on any matters presented to the stockholders of the Company for their
action or consideration at any meeting of stockholders of the Company (or by written consent of stockholders in lieu of meeting),
except that the holders of Series D Convertible Preferred Stock may vote separately as a class on any matters that would (i) amend,
our Restated Articles of Organization, as amended, in a manner that adversely affects the rights of the Series D Convertible Preferred
Stock, (ii) alter or change adversely the powers, preferences or rights of the Series D Convertible Preferred Stock or alter or
amend the certificate of designation, (iii) authorize or create any class of shares ranking as to dividends, redemption or distribution
of assets upon liquidation senior to, or otherwise pari passu with, the Series D Convertible Preferred Stock, or (iv) increase
the number of authorized shares of Series D Convertible Preferred Stock. If, within 12 months
of the initial issuance of the Series D Convertible Preferred Stock, we issue any common stock, common stock equivalents, indebtedness
or any combination thereof (a “ Subsequent Financing Series D Warrants The Series D Warrants
originally had an exercise price equal to $0.81 per share of common stock. In April 2012, the number of Series D Warrants increased
by 530,406 to a total of 1,047,875 and each Series D Warrant had an exercise price reset to $0.40 per share of common stock. In
December of 2013 the number of Series D Warrants increased by 628,733 to a total of 1,676,608 and each Series D Warrant had an
exercise price reset to $0.25 per share of common stock. The Series D Warrants will be exercisable beginning on the six-month anniversary
of the date of issuance and expire five years from the initial exercise date. The Series D Warrants permit the holder to conduct
a “cashless exercise” at any time a registration statement registering, or the prospectus contained therein, is not
available for the issuance of the shares of common stock issuable upon exercise of the Series D Warrant, and under certain circumstances
at the expiration of the Series D Warrants. The exercise price and/or number of shares of common stock issuable upon exercise of
the Series D Warrants are subject to adjustment for certain stock dividends, stock splits or similar capital reorganizations, as
set forth in the Warrants. The exercise price is also subject to adjustment in the event that we issue any shares of common stock
or common stock equivalents at a per share price that is lower than the exercise price for the Series D Warrants then in effect.
Upon any such issuance, subject to certain exceptions, the exercise price will be reduced to the per share price at which such
shares of common stock or common stock equivalents are issued and number of Series D Warrant shares issuable thereunder shall be
increased such that the aggregate exercise price payable thereunder, after taking into account the decrease in the exercise price,
shall be equal to the aggregate exercise price prior to such adjustment. Unless waived under certain circumstance by the holder
of a Series D Warrant, such holder may not exercise the Series D Warrant if upon such exercise the holderÂ’s beneficial ownership
of the CompanyÂ’s common stock would exceed certain thresholds. In the event we
consummate a merger or consolidation with or into another person or other reorganization event in which our shares of common stock
are converted or exchanged for securities, cash or other property, or we sell, lease, license or otherwise dispose of all or substantially
all of our assets or we or another person acquire 50% or more of our outstanding shares of common stock, then following such event,
the holders of the Series D Warrants will be entitled to receive upon exercise of the Series D Warrants the same kind and amount
of securities, cash or property which the holders would have received had they exercised the Series D Warrants immediately prior
to such fundamental transaction. Series G Convertible
Preferred Stock On July 6 and November
15, 2012, we completed a private placement, pursuant to which we sold an aggregate of 145,320 units for a purchase price of $5.00
per unit (the “Series G Purchase Price”), resulting in gross proceeds to us of $726,600 (the “ Series G Private
Placement Series G Unit Series G Each share of Series
G Preferred Stock will receive a cumulative dividend at the annual rate of (i) four percent (4%) on those shares of Series G Preferred
Stock purchased from the Company by an individual purchaser with an aggregate investment of less than $100,000, (ii) six percent
(6%) on those shares of Series G Preferred Stock purchased from the Company by an individual purchaser with an aggregate investment
of at least $100,000 but less than $250,000, and (iii) twelve percent (12%) on those shares of Series G Preferred Stock purchased
from the Company by an individual purchaser with an aggregate investment of at least $250,000. Dividends accruing on the Series
G Preferred Stock shall accrue from day to day until, and shall be paid within fifteen (15) days of, the first anniversary of,
the original issue date of the Series G Preferred Stock; provided, however, if any shares of the CompanyÂ’s Series E Preferred
Stock are outstanding at such time, payment of the accrued dividends on the Series G Preferred Stock shall be deferred until no
such shares of Series E Convertible Preferred Stock remain outstanding. The Company may pay accrued dividends on the Series G Preferred
Stock in cash or in shares of its common stock equal to the volume weighted average price of the common stock as reported by the
OTC QB Market for the ten (10) trading days immediately preceding the Series GÂ’s first anniversary. At the election
of the Company and upon required advanced notice, each share of Series G Preferred Stock will automatically be converted into shares
of common stock at the Conversion Ratio then in effect: (i) if, after 6 months from the original issuance date of the Series G
Preferred Stock, the common stock trades on the OTC QB Market (or other primary trading market or exchange on which the common
stock is then traded) at a price equal to at least $0.75, for 7 out of 10 consecutive trading days with average daily trading volume
of at least 10,000 shares, (ii) on or after the first anniversary of the original issuance date of the Series G Preferred Stock
or (iii) upon completion of a firm-commitment underwritten registered public offering by the Company at a per share price equal
to at least $0.75, with aggregate gross proceeds to the Company of not less than $2.5 million. Unless waived under certain circumstances
by the holder of the Series G Preferred Stock, such holderÂ’s Series G Preferred Stock may not be converted if upon such conversion
the holderÂ’s beneficial ownership would exceed certain thresholds. The holders of
Series G Preferred Stock are not entitled to vote on any matters presented to the stockholders of the Company for their action
or consideration at any meeting of stockholders of the Company (or by written consent of stockholders in lieu of meeting), except
as required by law. Series G Warrants The Series G Warrants
issued in the Series G Private Placement had an exercise price equal to $0.50 per share and expired on July 6, 2015. Series H Convertible
Preferred Stock On December 28,
2012 the Company amended the Articles of Incorporation to authorize 10,000 shares of Series H Convertible Preferred Stock. On January
4, 2013, the Company reported that it had entered into a securities purchase and exchange agreement with an investor, pursuant
to which the Company agreed to exchange 1,000,000 shares of the CompanyÂ’s common stock, par value $0.01 per share of common
stock held by the investor for an aggregate of 10,000 shares of a newly created series of preferred stock, designated Series H
Convertible Preferred Stock, par value $0.01 per share (the “ Series H Preferred Stock Series H2 Convertible
Preferred Stock On December 23,
2014 the Company amended the Articles of Incorporation to authorize 21 shares of Series H2 Convertible Preferred Stock. On December
23, 2014, the Company reported that it had entered into a securities purchase and exchange agreement with an investor, pursuant
to which the Company agreed to exchange 2,100,000 shares of the CompanyÂ’s common stock, par value $0.01 per share of common
stock held by the investor for an aggregate of 21 shares of a newly created series of preferred stock, designated Series H2 Convertible
Preferred Stock, par value $0.01 per share (the “ Series H2 Preferred Stock Series J Convertible
Preferred Stock On February 6,
March 28 and May 20, 2013, the Company entered into a Securities Purchase with various individuals pursuant to which the Company
sold an aggregate of 5,087.5 units for a purchase price of $400.00 per unit (the “Purchase Price”), or an aggregate
Purchase Price of $2,034,700. Each unit purchased in the initial tranche consists of (i) one share of a newly created series of
preferred stock, designated Series J Convertible Preferred Stock, par value $0.01 per share (the “Series J Convertible Preferred
Stock”), convertible into 1,000 shares of the Company’s common stock, par value $0.01 per share and (ii) a warrant
to purchase 1,000 shares of common stock at an exercise price equal to $0.40 per share. The warrants expire three years from the
issuance date. From the date of
issuance of any shares of Series J Convertible Preferred Stock and until the earlier of the first anniversary of such date, the
voluntary conversion of any shares of Series J Convertible Preferred Stock, or the date of any mandatory conversion (solely under
the CompanyÂ’s control based upon certain triggering events) of the Series J Convertible Preferred Stock, dividends will accrue
on each share of Series J Convertible Preferred Stock at an annual rate of (i) four percent (4%) of the Purchase Price on those
shares of Series J Convertible Preferred Stock purchased from the Company pursuant to the Securities Purchase Agreement by an individual
purchaser who purchased from the Company shares of Series J Convertible Preferred Stock with an aggregate Purchase Price of less
than $250,000, and (ii) six percent (6%) of the Purchase Price on those shares of Series J Convertible Preferred Stock purchased
from the Company pursuant to the Securities Purchase Agreement by an individual purchaser who purchased shares of Series J Convertible
Preferred Stock with an aggregate purchase price of at least $250,000. Dividends accruing on the Series J Convertible Preferred
Stock shall accrue from day to day until the earlier of the first anniversary of the date of issuance of such shares of Series
J Convertible Stock, the voluntary conversion of any shares of Series J Convertible Preferred Stock, or the date of any mandatory
conversion of the Series J Convertible Preferred Stock, and shall be paid, as applicable, within fifteen (15) days of the first
anniversary of the original issue date of the Series J Convertible Preferred Stock, within five (5) days of the voluntary conversion
of shares of the Series J Convertible Preferred Stock, or within five (5) days of the mandatory conversion of shares of the Series
J Convertible Preferred Stock. The Company may pay accrued dividends on the Series J Convertible Preferred Stock in cash or, in
the sole discretion of the Board of Directors of the Company, in shares of its common stock in accordance with a specified formula. Each share of Series
J Convertible Preferred Stock is convertible into 1,000 shares of common stock at the option of the holder on or after the six-month
anniversary of the issuance of such share, subject to adjustment for stock splits, stock dividends, recapitalizations and similar
transactions (the “Conversion Ratio”). Unless waived under certain circumstances by the holder of Series J Convertible
Preferred Stock, such holderÂ’s shares of Series J Convertible Preferred Stock may not be converted if upon such conversion
the holderÂ’s beneficial ownership would exceed certain thresholds. At the election
of the Company and upon required advance notice, each share of Series J Convertible Preferred Stock will automatically be converted
into shares of common stock at the Conversion Ratio then in effect: (i) on or after the six-month anniversary of the original issuance
date of the Series J Convertible Preferred Stock, the common stock trades on the OTC QB Market (or other primary trading market
or exchange on which the common stock is then traded) at a price per share equal to at least $0.80 for 7 out of 10 consecutive
trading days with average daily trading volume of at least 50,000 shares, (ii) on the first anniversary of the original issuance
date of the Series J Convertible Preferred Stock or (iii) within three days of the completion of a firm-commitment underwritten
registered public offering by the Company at a per share price equal to at least $0.80, with aggregate gross proceeds to the Company
of not less than $2.5 million. Unless waived under certain circumstances by the holder of the Series J Convertible Preferred Stock,
such holderÂ’s Series J Convertible Preferred Stock may not be converted if upon such conversion the holderÂ’s beneficial
ownership would exceed certain thresholds. The holders of
Series J Convertible Preferred Stock are not entitled to vote on any matters presented to the stockholders of the Company for their
action or consideration at any meeting of stockholders of the Company (or by written consent of stockholders in lieu of meeting),
except as required by law. Series J Warrants The Warrants issued
in the Private Placement have an exercise price equal to $0.40 per share, with a term expiring three years from the issuance date.
The Warrants also permit the holder to conduct a “cashless exercise” at any time the holder of the Warrant is an affiliate
of the Company. The exercise price and/or number of shares issuable upon exercise of the Warrants will be subject to adjustment
for stock dividends, stock splits or similar capital reorganizations, as set forth in the Warrant agreement. Subject to the
terms and conditions of the Warrants, at any time commencing six months from the closing date of the sale of Units under the Securities
Purchase Agreement the Company has the right to call the Warrants for cancellation if the volume weighted average price of its
common stock on the OTC QB Market (or other primary trading market or exchange on which the common stock is then traded) equals
or exceeds three times the per share exercise price of the Warrants for either (i) 10 consecutive trading days or (ii) 15 out of
25 consecutive trading days. Registration
Rights Agreement In connection with
the Private Placement, the Company has agreed that, if, at any time after February 1, 2014, the Company files a Registration Statement
relating to an offering of equity securities of the Company (the “Registration Statement”), subject to certain exceptions,
including a Registration Statement relating solely to an offering or sale of securities having an aggregate public offering price
of less than $5,000,000, the Company shall include in the Registration Statement the resale of the shares of common stock underlying
the Warrants. Shares of common stock issued upon conversion of Series J Convertible Preferred Stock or in payment of the dividend
on the Series J Convertible Preferred Stock will not be registered and will not be subject to registration rights. This right is
subject to customary conditions and procedures. Series K Convertible
Preferred Stock On December 12,
2013, the Company entered into a Securities Purchase with various individuals pursuant to which the Company sold an aggregate of
4,000 units for a purchase price of $250.00 per unit (the “Purchase Price”), for an aggregate Purchase Price of $1,000,000.
Each unit purchased in the initial tranche consists of (i) one share of a newly created series of preferred stock, designated Series
K Convertible Preferred Stock, par value $0.01 per share (the “Series K Convertible Preferred Stock”), convertible
into 1,000 shares of the CompanyÂ’s common stock, par value $0.01 per share and (ii) a warrant to purchase 500 shares of common
stock at an exercise price equal to $0.3125 per share. The warrants expire three years from the issuance date. Of the $1,000,000
invested in the Private Placement, $572,044 was received in cash and $427,956 was from the conversion of outstanding indebtedness
and interest. The Company incurred $43,334 of fees in conjunction with this private placement. The purchasers in the initial tranche
of the private placement consisted of certain existing and new investors in the Company as well as all of the members of the CompanyÂ’s
Board of Directors. From the date of
issuance of any shares of Series K Convertible Preferred Stock and until the earlier of the first anniversary of such date, the
voluntary conversion of any shares of Series K Convertible Preferred Stock, or the date of any mandatory conversion (solely under
the CompanyÂ’s control based upon certain triggering events) of the Series K Convertible Preferred Stock, dividends will accrue
on each share of Series K Convertible Preferred Stock at an annual rate of (i) four percent (4%) of the Purchase Price on those
shares of Series K Convertible Preferred Stock purchased from the Company pursuant to the Securities Purchase Agreement by an individual
purchaser who purchased from the Company shares of Series K Convertible Preferred Stock with an aggregate Purchase Price of less
than $100,000, and (ii) six percent (6%) of the Purchase Price on those shares of Series K Convertible Preferred Stock purchased
from the Company pursuant to the Securities Purchase Agreement by an individual purchaser who purchased shares of Series K Convertible
Preferred Stock with an aggregate purchase price of at least $100,000. Dividends accruing on the Series K Convertible Preferred
Stock shall accrue from day to day until the earlier of the first anniversary of the date of issuance of such shares of Series
K Convertible Stock, the voluntary conversion of any shares of Series K Convertible Preferred Stock, or the date of any mandatory
conversion of the Series K Convertible Preferred Stock, and shall be paid, as applicable, within fifteen (15) days of the first
anniversary of the original issue date of the Series K Convertible Preferred Stock, within five (5) days of the voluntary conversion
of shares of the Series K Convertible Preferred Stock, or within five (5) days of the mandatory conversion of shares of the Series
K Convertible Preferred Stock. The Company may pay accrued dividends on the Series K Convertible Preferred Stock in cash or, in
the sole discretion of the Board of Directors of the Company, in shares of its common stock in accordance with a specified formula. Each share of Series
K Convertible Preferred Stock is convertible into 1,000 shares of common stock at the option of the holder on or after the six-month
anniversary of the issuance of such share, subject to adjustment for stock splits, stock dividends, recapitalizations and similar
transactions (the “Conversion Ratio”). Unless waived under certain circumstances by the holder of Series K Convertible
Preferred Stock, such holderÂ’s shares of Series K Convertible Preferred Stock may not be converted if upon such conversion
the holderÂ’s beneficial ownership would exceed certain thresholds. At the election
of the Company and upon required advance notice, each share of Series K Convertible Preferred Stock will automatically be converted
into shares of common stock at the Conversion Ratio then in effect: (i) on or after the six-month anniversary of the original issuance
date of the Series K Convertible Preferred Stock, the common stock trades on the OTC QB Market (or other primary trading market
or exchange on which the common stock is then traded) at a price per share equal to at least $0.80 for 7 out of 10 consecutive
trading days with average daily trading volume of at least 50,000 shares, (ii) on the first anniversary of the original issuance
date of the Series K Convertible Preferred Stock or (iii) within three days of the completion of a firm-commitment underwritten
registered public offering by the Company at a per share price equal to at least $0.80, with aggregate gross proceeds to the Company
of not less than $2.5 million. Unless waived under certain circumstances by the holder of the Series K Convertible Preferred Stock,
such holderÂ’s Series K Convertible Preferred Stock may not be converted if upon such conversion the holderÂ’s beneficial
ownership would exceed certain thresholds. The proceeds from
the sale of each Series K Unit were allocated between the Series K Convertible Preferred Stock and the Series K Warrants based
on the relative fair value method. The estimated fair value of the Series K Warrants was determined using a Black-Scholes formula,
resulting in an allocation of the gross proceeds of $271,422 to the total warrants issued. The allocation of the gross proceeds
to the Series K Convertible Preferred Stock was $685,245, net of $43,334 in fees. In accordance with the provisions of ASC 470-20,
an additional adjustment in the aggregate between Additional Paid in Capital and Accumulated Deficit of $1,495,415 was recorded
for all tranches of Series K to reflect an implicit, deemed non-cash dividend related to the allocation of proceeds between the
stock and warrants issued. The $1,495,415 represents the aggregate value of the adjustment to additional paid in capital related
to the beneficial conversion feature of the Series K Convertible Preferred Stock. The value adjustment was calculated by subtracting
the fair market value of the underlying common stock on the closing dates issuable upon conversion of the Series K Convertible
Preferred Stock from the fair market value of the Series K Convertible Preferred Stock as determined when the Company performed
a fair market value allocation of the proceeds to the Series K Convertible Preferred Stock and warrants. On January 29,
2014, the Company entered into a Securities Purchase Agreement with various accredited investors, pursuant to which the Company
sold an aggregate of 4,875 units for a purchase price of $250.00 per unit or an aggregate Purchase Price of $1,218,750. This was
the second tranche of a $1.5 million private placement previously disclosed by the Company in its Current Report on Form 8-K filed
with the Securities and Exchange Commission on December 12, 2013, which is incorporated by reference herein. The Purchasers in
the second tranche of the Private Placement consisted of certain existing and new investors in the Company, as well as all of the
members of the CompanyÂ’s board of directors. Each unit purchased
in the second tranche consists of (i) one share of Series K Convertible Preferred Stock, par value $0.01 per share, convertible
into 1,000 shares of the CompanyÂ’s common stock, par value $0.01 per share and (ii) a warrant to purchase 500 shares of common
stock at an exercise price equal to $0.3125 per share, with a term expiring on January 29, 2017. On February 28,
2014, the Company entered into a Securities Purchase Agreement with various accredited investors, pursuant to which the Company
sold an aggregate of 1,854 units for a purchase price of $340.00 per unit or an aggregate Purchase Price of $630,360. This was
the third tranche of a $1.5 million private placement previously disclosed by the Company in its Current Report on Form 8-K filed
with the Securities and Exchange Commission on December 12, 2013, which is incorporated by reference herein. The Purchasers in
the third tranche of the Private Placement consisted of certain existing and new investors in the Company. Each unit purchased
in the third tranche consists of (i) one share of Series K Convertible Preferred Stock, par value $0.01 per share convertible into
1,000 shares of the CompanyÂ’s common stock, par value $0.01 per share and (ii) a warrant to purchase 500 shares of common
stock at an exercise price equal to $0.425 per share, with a term expiring on February 28, 2017. On June 30, 2014,
the Company entered into a Securities Purchase Agreement with various accredited investors, pursuant to which the Company sold
an aggregate of 734 units for a purchase price of $300.00 per unit or an aggregate Purchase Price of $220,000. This was the fourth
tranche of a $1.5 million private placement previously disclosed by the Company in its Current Report on Form 8-K filed with the
Securities and Exchange Commission on December 12, 2013, which is incorporated by reference herein. The Purchasers in the fourth
tranche of the Private Placement consisted of certain existing and new investors in the Company. Each unit purchased
in the fourth tranche consists of (i) one share of Series K Convertible Preferred Stock, par value $0.01 per share convertible
into 1,000 shares of the CompanyÂ’s common stock, par value $0.01 per share and (ii) a warrant to purchase 500 shares of common
stock at an exercise price equal to $0.375 per share, with a term expiring on June 30, 2017. On November 12,
2014, the Company entered into a Securities Purchase Agreement with various accredited investors, pursuant to which the Company
sold an aggregate of 1,052 units for a purchase price of $250.00 per unit or an aggregate Purchase Price of $263,000. This was
the fifth tranche of a $1.5 million private placement previously disclosed by the Company in its Current Report on Form 8-K filed
with the Securities and Exchange Commission on December 12, 2013, which is incorporated by reference herein. The Purchasers in
the fourth tranche of the Private Placement consisted of certain existing and new investors in the Company. Each unit purchased
in the fifth tranche consists of (i) one share of Series K Convertible Preferred Stock, par value $0.01 per share convertible into
1,000 shares of the CompanyÂ’s common stock, par value $0.01 per share and (ii) a warrant to purchase 500 shares of common
stock at an exercise price equal to $0.3125 per share, with a term expiring on November 12, 2017. The Private Placement
was originally expected to raise $1.5 million and close on or before January 31, 2014. On January 29, 2014, the CompanyÂ’s
Board of Directors voted to increase the subscription amount of the Private Placement by $718,750. The Board of Directors also
voted to extend the Private Placement until February 28, 2014. On February 28, 2014 the CompanyÂ’s Board of Directors voted
to increase the subscription amount once again to a total of $3.5 million and extended the closing to April 4, 2014. On April 13,
2014 the CompanyÂ’s Board of Directors voted to increase the subscription amount by $1 million, to a total of $4.5 million,
and extended the closing to May 31, 2014. On July 7, 2014 the CompanyÂ’s Board of Directors voted to extend the closing to
August 15, 2014. Together with the initial tranche of $1,000,000 that closed on December 12, 2013, the second tranche of $1,218,750
that closed January 29, 2014, the third tranche of $630,360 that closed February 28, 2014, the fourth tranche of $220,000 that
closed June 30, 2014, and the fifth tranche of $263,000 that closed November 12, 2014,the total consideration received by the Company
in the Private Placement is $3,332,110, which is comprised of $2,511,404 in cash and $820,706 from the conversion of outstanding
indebtedness and Board of Director |
