As of June 30, 2015, the Company has 300,000,000 common shares authorized of which 70,482,486 were issued and outstanding. The Company would need approximately 330,000,000 common shares to accommodate the exercise and conversion of all of the common stock options, warrants, convertible debt, and unvested restricted stock presently outstanding, and would not be able to accommodate all such exercise and conversion requests through the remaining unissued common shares. Accordingly, the Company could be required to settle a portion of its warrants and derivative liabilities in cash which requires that they continue to be classified as liabilities rather than equity instruments.

[2]

Some of the Company's warrant agreements previously included anti-dilution adjustments whereby the exercise price and number of shares would reset to a lower price and additional shares (a "Reset Event"). Upon a Reset Event, the fair value of the warrant liability was adjusted and a loss was recognized. As of June 30, 2015, the warrant agreements have been amended whereby substantially all anti-dilution features have been eliminated.