Note 12

Stockholders' Equity:

Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.10 per share with such designation, rights and preferences as may be determined from time to time by the Company's Board of Directors. There were 36,182 and 0 shares of Series C convertible preferred stock issued and outstanding on December 31, 2017 and 2016, respectively, and there were 0 and 6,000 shares of Series B convertible preferred stock issued and outstanding on December 31, 2017 and 2016, respectively.

Other than the limitations on conversions to keep each such holders beneficial ownership below 9.99%, the terms of the Series C Convertible Preferred Stock generally bestow the same rights to each holder as such holder would receive if they are common stock shareholder and are not redeemable by the holders, except that the Series C Convertible Preferred Stock shares do not have voting rights. The Series C Convertible Preferred Stock have the same level of subordination as common stock. Each share of Series C Convertible Preferred Stock has a stated value of $1,000 and is convertible into shares of common stock at a conversion price equal to $2.69 for a total of approximately 15,049,000 shares of common stock.

During October 2017, investors converted Series C Preferred Stock into 1,598,346 shares of common stock.

Common Stock and Warrants

The Company is authorized to issue 150,000,000 shares of common stock with a par value of $0.001 per share. There were 4,304,425 and 2,166,898 issued and outstanding at December 31, 2017 and 2016, respectively.

Outstanding common stock warrants at December 31, 2017 consist of the following:

Issue Date	Expiration Date	Total Warrants		Exercise Price

4/26/2013	4/26/2018		13,865	$	55.90
10/31/2013*	4/30/2019		137,143	$	3.75
2/5/2014*	2/5/2019		265,947	$	3.75
7/24/2014	7/24/2019		1,239,769	$	3.75 - $ 12.25
6/22/2015	6/22/2020		600,000	$	3.75
12/30/2015	12/30/2020		130,089	$	5.65
1/29/2016	1/29/2021		19,812	$	5.30
			2,406,625

*These warrants are classified as liabilities (See Note 11, Warrants).