Item
15. Recent Sales of Unregistered Securities
We
issued shares of our common stock in the following transactions.
The
securities were issued in reliance upon exemptions from registration pursuant to Section 4(2) of the Securities Act and the rules
and regulations promulgated thereunder.
2017(2)
Unit Offering
We
sold securities under separate subscription agreements (each, a “
2017(2)-Subscription Agreement
”), by and between
the Company and investors (each a “
2017(2)-Purchaser
” and collectively, the “
2017(2)-Purchasers
”),
pursuant to which we issued and sold to the 2017(2)-Purchasers units (each a “
2017(2)-Unit
” and collectively
the “
2017(2)-Units
”) consisting of shares of our common stock and warrants to purchase shares of our common
stock.
During
the year ended December 31, 2017, we sold 416,595 2017(2)-Units for an aggregate purchase price of $124,979. Each 2017(2)-Unit
consisted of (i) one share of our common stock, and (ii) a five-year warrant to purchase one share of our common stock at $0.30.
No placement agent or broker dealer was used or participated in any offering or sale of such 2017(2)-Units.
The
foregoing summary of the 2017(2)-Subscription Agreement does not purport to be complete and is qualified in its entirety by reference
to the full text of such agreement, which was filed with our Quarterly Report on Form 10-Q filed November 14, 2017.
2017(1)
Unit Offering
We
sold securities under separate subscription agreements (each, a “
2017(1)-Subscription Agreement
”), by and between
the Company and investors (each a “
2017(1)-Purchaser
” and collectively, the “
2017(1)-Purchasers
”),
pursuant to which we issued and sold to the 2017(1)-Purchasers units (each a “
2017(1)-Unit
” and collectively
the “
2017(1)-Units
”) consisting of shares of our common stock and warrants to purchase shares of our common
stock.
During
the year ended December 31, 2017, we sold an aggregate of 31,453,788 2017(1)-Units for an aggregate purchase price of $3,774,456.
Each 2017(1)-Unit consisted of (i) one share of our common stock, and (ii) a five-year warrant to purchase one share of our common
stock at $0.12. No placement agent or broker dealer was used or participated in any offering or sale of such 2017(1)-Units.
The
foregoing summary of the 2017(1)-Subscription Agreement does not purport to be complete and is qualified in its entirety by reference
to the full text of such agreement, which was filed with our Annual Report on Form 10-K filed March 31, 2017.
2016/2017
Unit Offering
We
sold securities under separate subscription agreements (each, a “
2016/2017-Subscription Agreement
”), by and
between the Company and investors (each a “
2016/2017-Purchaser
” and collectively, the “
2016/2017-Purchasers
”),
pursuant to which we issued and sold to the 2016/2017-Purchasers units (each a “
2016/2017-Unit
” and collectively
the “
2016/2017-Units
”) consisting of shares of our common stock and warrants to purchase shares of our common
stock.
During
the year ended December 31, 2016 and the first quarter of 2017, we sold an aggregate of 16,250,000 2016/2017-Units for an aggregate
purchase price of $1,300,000. Each 2016/2017-Unit consisted of (i) one share of our common stock, (ii) a five-year warrant to
purchase one share of our common stock at $0.08, (iii) a five-year warrant to purchase one share of our common stock at $0.12,
and (iv) a five-year warrant to purchase one share of our common stock at $0.16. No placement agent or broker dealer was used
or participated in any offering or sale of such 2016/2017-Units.
The
foregoing summary of the 2016/2017-Subscription Agreement does not purport to be complete and is qualified in its entirety by
reference to the full text of such agreement, which was filed with our Quarterly Report on Form 10-Q on May 13, 2016.
2015
Unit Offering
We
sold securities under subscription agreements (each, a “
2015 Subscription Agreement
”), by and between the Company
and investors (each a “
2015 Purchaser
” and collectively, the “
2015 Purchasers
”), pursuant
to which we issued and sold to the 2015 Purchasers units (each a “
2015-Unit
” and collectively the “
2015-Units
”)
consisting of shares of our common stock and warrants (each, a “
2015-Warrant
” and, collectively, the “
2015-Warrants
”)
to purchase shares of our common stock.
In
the year ended December 31, 2015, we sold an aggregate of 6,020,725 2015-Units for an aggregate purchase price of $1,806,222.
Each 2015-Unit consisted of (i) one share of our common stock, (ii) two Class D Warrants, each to purchase one share of our common
stock at $0.10, and (iii) one Class E warrant to purchase three-quarters of one share of our common stock at a price per share
of $0.1667. The Class D warrants and the Class E warrants will expire March 31, 2020.
No
placement agent or broker dealer was used or participated in any offering or sale of such 2015-Units. On September 8, 2015, we
engaged a broker dealer to assist in an offering of our securities as a placement agent. In connection with the engagement, we
issued warrants to the broker dealer to purchase 149,000 shares of our common stock at $0.30 per share, 298,000 shares of our
common stock at $0.10 per share, and 111,750 shares of our common stock at $0.1667 per share, which expire December 31, 2020.
The
foregoing summary of the 2015 Subscription Agreement does not purport to be complete and is qualified in its entirety by reference
to the full text of such agreement, which was filed with our Current Report on Form 8-K on March 9, 2015.
Equity
Purchase Agreement
On
March 7, 2017, we sold 567,644 shares of our common stock at a price of $0.1057 per share pursuant to the equity purchase agreement
(the “
Equity Purchase Agreement
”) with Southridge Partners II LP (“
Southridge
”), which we
previously reported in the Registration Statement on Form S-1 (333-214049) filed on February 8, 2017. Pursuant to the terms of
the Equity Purchase Agreement, we have the right, but not the obligation, to sell shares of our common stock to Southridge and
Southridge has the right to resell the shares of our common stock.
On
July 13, 2016, the date we entered into the Equity Purchase Agreement, we issued 1,500,000 shares of our common stock (the “
Initial
Shares
”) to Southridge, which were not subject to any vesting provisions. Southridge has the right to sell up to 200,000
of the Initial Shares in any calendar month and we have the right to repurchase up to 200,000 shares of our common stock held
by Southridge at a price per share equal to $0.067, subject to adjustment for stock splits and similar events.
The
foregoing summary of the Equity Purchase Agreement does not purport to be complete and is qualified in its entirety by reference
to the full text of such agreement, which was filed with our Current Report on Form 8-K on July 13, 2016.
Settlement
of Payable
On
May 3, 2017, we settled a payable in the amount of $44,700 with a previously engaged broker dealer through the issuance 558,750
units. Each unit consisted of: (i) one (1) share of our common stock, (ii) a five-year warrant to purchase one (1) share of our
common stock at $0.08 per share, (iii) a five-year warrant to purchase one (1) share of our common stock at $0.12 per share, and
(iv) a five-year warrant to purchase one (1) share of our common stock at $0.16 per share.
Warrant
Exercise
During
the year ended December 31, 2017, we issued 233,217 shares of common stock in connection with the cashless exercise of a warrant
for 298,000 shares of common stock at $0.10 per share with 64,783 shares of common stock withheld with an aggregate fair market
value equal to the aggregate exercise price
During
the year ended December 31, 2017, we issued 500,000 shares of common stock in connection with the exercise of a warrant for 500,000
shares of common stock at $0.08 per share in exchange for $40,000.
Stock
Option Exercise
On
April 16, 2018, we issued 76,924 shares of our Common Stock in connection with the cashless exercise of stock options for 100,0000
shares of our Common Stock at $0.06 per share with 23,076 shares of our Common Stock withheld with an aggregate fair market value
equal to the aggregate exercise price.
On
May 2, 2018, we issued 80,073 shares of our Common Stock in connection with the cashless exercise of stock options for 100,0000
shares of our Common Stock at $0.06 per share with 19,927 shares of our Common Stock withheld with an aggregate fair market value
equal to the aggregate exercise price.
During
the year ended December 31, 2017, we issued 645,288 shares of common stock in connection with the cashless exercise of stock options
for 100,000, 45,000, and 625,000 shares of common stock at $0.155, $0.06, and $0.06, respectively, per share with 124,712 shares
of common stock withheld with an aggregate fair market value equal to the aggregate exercise price.
On
October 26, 2015, we issued 25,556 shares of our common stock in connection with the cashless exercise of a stock option for 41,851
shares of our common stock at $0.155 per share with 16,295 shares of our common stock withheld with an aggregate fair market value
equal to the aggregate exercise price.
Stock
Based Compensation
During
the year ended December 31, 2015, we issued 458,170 shares of our common stock to our independent directors for compensation.
During the year ended December 31, 2016, we issued 468,254 shares of our common stock to our independent directors for compensation.
During the year ended December 31, 2017, we issued 793,025 shares of our common stock to our independent directors for compensation
and 200,000 shares of our common stock to service providers for compensation. During the nine-months ended September 30, 2018,
we issued 906,774 shares of our common stock to our independent directors for compensation.
On
July 27, 2018, we issued warrants to purchase 315,010 shares of our common stock at an exercise price of $0.21 per share until
July 27, 2023 to placement agents for compensation.
The
following table sets forth options to purchase shares of our common stock we issued to employees, directors, and service providers
for compensation.
Date
of
Issuance
|
|
Number
of
Shares Underlying
Options
Issued
|
|
|
Option
Exercise
Price
|
|
|
Option
Expiration
Date
|
|
Vesting
|
June
30, 2015
|
|
|
1,979,246
|
|
|
$
|
0.32
|
|
|
June
30, 2020
|
|
(1)
|
June
30, 2015
|
|
|
2,672,830
|
|
|
$
|
0.20
|
|
|
June
30, 2020
|
|
(1)
|
September
30, 2015
|
|
|
713,653
|
|
|
$
|
0.49
|
|
|
September
30, 2020
|
|
(1)
|
December
31, 2015
|
|
|
1,091,161
|
|
|
$
|
0.27
|
|
|
December
31, 2020
|
|
(1)
|
March
31, 2016
|
|
|
5,945,469
|
|
|
$
|
0.06
|
|
|
March
31, 2021
|
|
(1)
|
July
11, 2016
|
|
|
100,000
|
|
|
$
|
0.07
|
|
|
July
11, 2021
|
|
(2)
|
September
30, 2016
|
|
|
27,778
|
|
|
$
|
0.15
|
|
|
September
30, 2021
|
|
(1)
|
December
31, 2016
|
|
|
83,333
|
|
|
$
|
0.15
|
|
|
December
31, 2021
|
|
(1)
|
March
31, 2017
|
|
|
78,125
|
|
|
$
|
0.185
|
|
|
March
31, 2022
|
|
(1)
|
June
30, 2017
|
|
|
83,333
|
|
|
$
|
0.20
|
|
|
June
30, 2022
|
|
(1)
|
September
25, 2017
|
|
|
400,000
|
|
|
$
|
0.50
|
|
|
September
25, 2027
|
|
(3)
|
September
25, 2017
|
|
|
400,000
|
|
|
$
|
0.47
|
|
|
September
25, 2027
|
|
(4)
|
November
1, 2017
|
|
|
1,000,000
|
|
|
$
|
0.44
|
|
|
November
1, 2027
|
|
(3)
|
November
27, 2017
|
|
|
100,000
|
|
|
$
|
0.37
|
|
|
November
27, 2027
|
|
(3)
|
December
13, 2017
|
|
|
100,000
|
|
|
$
|
0.34
|
|
|
December
13, 2027
|
|
(3)
|
January
1, 2018
|
|
|
500,000
|
|
|
$
|
0.16
|
|
|
January
1, 2028
|
|
(3)
|
January
1, 2018
|
|
|
333,334
|
|
|
$
|
0.16
|
|
|
January
1, 2023
|
|
(5)
|
June
1, 2018
|
|
|
1,000,000
|
|
|
$
|
0.24
|
|
|
June
1, 2028
|
|
(6)
|
November
14, 2018
|
|
|
1,000,000
|
|
|
$
|
0.21
|
|
|
November
14, 2028
|
|
(7)
|
(1)
|
The
shares were fully vested upon issuance.
|
|
|
(2)
|
The
shares vested quarterly over one year.
|
|
|
(3)
|
One-fourth
of the shares vest one year from issuance and one forty-eighth of the shares vest monthly thereafter.
|
|
|
(4)
|
On
January 31, 2018, 50,000 shares were fully vested and 350,000 shares were cancelled.
|
|
|
(5)
|
The
shares vest monthly over one year.
|
|
|
(6)
|
The
shares vest monthly over two years.
|
|
|
(7)
|
One-half
of the shares vest monthly over four years and the remaining shares vest upon certain milestones.
|
Item
17. Undertakings
The
undersigned Registrant hereby undertakes:
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)
to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the “
Act
”);
(ii)
to reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most-recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
(iii)
to include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement.
(2)
That, for the purpose of determining any liability under the Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold
at the termination of the offering.
(4)
Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers, and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit, or proceeding)
is asserted by such director, officer, or controlling person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
(5)
That, for the purpose of determining liability under the Act, to any purchaser, each prospectus filed pursuant to Rule 424(b)
as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other
than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as
of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus
that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior
to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of
the registration statement or made in any such document immediately prior to such date of first use.