5.	Convertible Preferred Stock, Common Stock and Common Stock Warrants

2018

Common Stock Offering

January 2018,

the Company entered into an Underwriting Agreement (the “Agreement”) pursuant to which it issued

15,000,000

shares of Common Stock and warrants to purchase

15,000,000

shares of Common Stock with an initial exercise price of

$0.80

per share for cash proceeds of

$10.8

million. In addition, as compensation for its services, the Company granted to the underwriter in the transaction an option (the “Over-Allotment Option”) to purchase, in the aggregate,

2,250,000

shares of Common Stock (the “Option Shares”) and warrants to purchase up to

2,250,000

shares of Common Stock (the “Option Warrants”). The underwriter exercised its right to purchase a portion of the Option Warrants and received an additional

1,970,625

warrants to purchase Common Stock with an initial exercise price

$0.80

per share.

In addition, at the closing, the Company issued to designees of the underwriter warrants to purchase up to

750,000

shares of Common Stock. The underwriter’s warrants have an exercise price of

$1.00

per share, a term of

five

years from the date of issuance and otherwise substantially similar terms to the form of the investor warrant.

During its evaluation of equity classification for the Common Stock warrants, the Company considered the conditions as prescribed within ASC

815

40,

Derivatives and Hedging, Contracts in an Entity’s own Equity

(“ASC

815

40”

). The conditions within ASC

815

are

not

subject to a probability assessment. The warrants do

not

fall under the liability criteria within ASC

480

Distinguishing Liabilities from Equity

as they are

not

puttable and do

not

represent an instrument that has a redeemable underlying security. The warrants do meet the definition of a derivative instrument under ASC

815,

but are eligible for the scope exception as they are indexed to the Company’s own stock and would be classified in permanent equity if freestanding.

As a result of the Company's Common Stock offering in

January 2018,

all outstanding shares of the Company's Series A convertible preferred stock converted into

21,006,918

shares of Common Stock of which (i)

8,306,278

shares were issued for the automatic conversion of Series A convertible preferred stock (ii)

1,032,219

shares were issued upon settlement of accrued dividends and (iii)

11,668,421

shares were issued for the settlement of the “make-whole” adjustment feature. A deemed dividend of

$8.2

million was recognized for the value of the common shares issued for the settlement of the make-whole adjustment feature.

Common Stock Warrants

As of

June

30,

2018,

the Company had the following warrants outstanding to acquire shares of its common stock:

	Outstanding		Range of exercise price per share				Expiration dates
Common stock warrants issued prior to 2016		36,000		$37.50	-	$49.00	2018 through 2019
Common stock warrants issued related to Series A convertible preferred stock offering		13,555,887			$2.22		March 2022
Common stock warrants issued in 2018 related to the common stock offering		17,720,625		$0.80	-	$1.00	January 2023
		31,312,512

During the

six

months ended

June

30,

2018,

411,721

warrants expired and

warrants were exercised.