12.	Mezzanine Equity

March 29, 2019,

the Company entered into a Stock Purchase Agreement with Family Trading for the sale of

27,129

newly issued perpetual convertible preferred shares (the “Series E Shares”) at a price of

$1,000

per share. The proceeds of the sale were used for the full and final settlement of all amounts due under the Further Amended Family Trading Credit Facility (see Note

). The issuance of the Series E Shares was approved by a committee of the Company’s board of directors, of which all of the directors were independent.

Each holder of Series E Shares, at any time, has the right, subject to certain conditions, to convert all or any portion of the Series E Shares then held by such holder into the Company’s common shares at the conversion rate then in effect. Each Series E Share is convertible into the number of the Company’s common shares equal to the quotient of

plus any accrued and unpaid dividends divided by the lesser of the following

four

prices (the “Series E Conversion Price”): (i)

$20.00,

(ii)

80%

of the lowest daily VWAP of the Company’s common shares over the

twenty

consecutive trading days expiring on the trading day immediately prior to the date of delivery of a conversion notice, (iii) the conversion price or exercise price per share of any of the Company’s then outstanding convertible shares or warrants, (iv) the lowest issuance price of the Company’s common shares in any transaction from the date of the issuance the Series E Shares onwards, but in

event will the Series E Conversion Price be less than

$0.60.

The holders of each Series E Share are entitled to the voting power of

one thousand

(

1,000

) common shares of the Company. Upon any liquidation, dissolution or winding up of the Company, the holders of Series E Shares shall be entitled to receive the net assets of the Company pari passu with the Common Shares. Furthermore the Company at its option shall have the right to redeem a portion or all of the outstanding Series E Shares. The Company shall pay an amount equal to

one thousand

dollars (

$1,000

) per each Series E Share (the “Liquidation Amount”), plus a redemption premium equal to

fifteen

percent (

15%

) of the Liquidation Amount being redeemed if that redemption takes place up to and including

March 29, 2020

and

twenty

percent (

20%

) of the Liquidation Amount being redeemed if that redemption takes place after

March 29, 2020,

plus an amount equal to any accrued and unpaid dividends on such Series E Shares (collectively referred to as the "Redemption Amount").

The Series E Shares shall

not

be subject to redemption in cash at the option of the holders thereof under any circumstance. Finally the holders of outstanding Series E Shares shall be entitled to receive, semi-annual dividends payable in cash on the last day of

June

and

December

in each year (each such date being referred to herein as a "Semi Annual Dividend Payment Date"), commencing on the

first

Semi Annual Dividend Payment Date in an amount per share (rounded to the nearest cent) equal to

fifteen

percent (

15%

) per year of the liquidation amount of the then outstanding Series E Shares computed on the basis of a

365

-day year and the actual days elapsed. Accrued but unpaid dividends shall bear interest at

fifteen

percent (

15%

). Dividends will

not

be payable in cash, if such payment violates any provision of any senior secured facility that the Company has entered or (as the case

may

be) will enter into, or any senior secured facility for which the Company has provided or (as the case

may

be) will provide a guarantee, for as long as such provisions, if any, remain in effect. Pursuant to the latter provision, on

June 30, 2019,

the Company issued

1,029

Series E Shares in lieu of dividends accumulated since the original issuance of the Series E Shares through

June 30, 2019.

As of

June 30, 2019,

upon conversion at the Series E Conversion Price (

$6.74

) of

28,158

Series E Shares outstanding, Family Trading would receive

4,177,745

common shares.

The Company has determined that the Series E shares was more akin to equity than debt and that the above identified conversion feature, subject to adjustments, was clearly and closely related to the host instrument, and accordingly bifurcation and classification of the conversion feature as a derivative liability was

not

required. Given the Series D and Series E preferred stock's holders (Lax Trust) control a majority of the votes, the preferred equity is in essence redeemable at the option of the holder and hence has been classified in Mezzanine equity as per ASC

480

S99

“Distinguishing liabilities from Equity – SEC Materials”. The Company has adjusted the carrying value of the Convertible Series E shares to the maximum redemption amount.

Pursuant to the issuance of the convertible preferred stock, the Company recognized the beneficial conversion feature by allocating the intrinsic value of the conversion option, which is the number of shares of common stock available upon conversion multiplied by the difference between the effective conversion price per share and the fair value of the Company's common stock per share on the commitment date, to additional paid-in capital, resulting in a discount of

$9,339

on the Series E convertible preferred stock. The Company has amortized the beneficial conversion in full in the

six

months ended

June 30, 2019

as the beneficial conversion was immediately exercisable and has been recognized as a deemed dividend. As the Company is in an accumulated deficit position, the offsetting amount was amortized as a deemed dividend recorded against additional paid-in-capital, as there is deficit in retained earnings.