Item 1.01 Entry into a Material Definitive
Agreement.
Closing of Securities Purchase Agreements
On September 14, 2017, the Company completed
an additional, final closing (the “Final Closing”) of a private placement offering to accredited investors (the “
Offering
”)
of up to $1,410,000 of units (the “
Units
”), with each Unit comprised of (i) one (1) share of Series D Preferred
Stock, par value $0.001 per share (the “
Series D Preferred Stock
”), (ii) fifteen (15) warrants (the “
Warrants
”)
to purchase shares of the Company’s common stock, par value $0.025 per share (“
Common Stock
”), and (iii)
three (3) shares of Common Stock, at a per unit purchase price of $10.00, as previously disclosed. In connection with the Final
Closing, the Company entered into a Securities Purchase Agreement with one (1) accredited investor (the “Final Closing Investor”),
and 3,250 shares of Series D Preferred Stock, 48,750 Warrants and 9,750 shares of Common Stock were issued, for aggregate gross
proceeds to the Company of $32,500. In connection with the Final Closing, an aggregate of 2,000 shares of Common Stock are issuable
to the Final Closing Investor as dividends for Series D Preferred Stock. Upon completion of the Final Closing, the Offering is
fully subscribed and closed, with the Company issuing an aggregate of 141,000 shares of Series D Preferred Stock, 2,115,000 Warrants
and 423,000 shares of Common Stock, with an aggregate of 86,579 shares of Common Stock issuable to investors in the Offering as
dividends for Series D Preferred Stock.
The Warrants are five year warrants to purchase
shares of Common Stock at an exercise price of $1.44 per share, exercisable beginning six months after the date of issuance thereof.
The Warrants provide for cashless exercise to the extent that there is no registration statement available for the underlying shares
of Common Stock.
The Company utilized the services of Garden
State Securities, Inc., a FINRA-registered placement agent, for the Offering. In connection with the Final Closing, the Company
paid such placement agent an aggregate cash fee of $2,600 and will issue to such placement agent or its designees 2,600 Warrants,
and pursuant to the Offering, in the aggregate, the Company paid such placement agent an aggregate cash fee of $112,800 and will
issue to such placement agent or its designees 112,800 Warrants. The net proceeds to the Company from the Final Closing, after
deducting the foregoing fees and other Offering expenses, are expected to be approximately $29,900, and the aggregate net proceeds
to the Company from the Offering, after deducting the foregoing fees and other Offering expenses, are expected to be approximately
$1,222,200.
The Company intends to use the proceeds of
the placement for capital expenditures. The Final Closing occurred following the satisfaction of customary closing conditions.
The representations and warranties contained
in the Securities Purchase Agreements were made by the parties to, and solely for the benefit of, the other in the context of all
of the terms and conditions of that agreement and in the context of the specific relationship between the parties. The provisions
of the Securities Purchase Agreements, including the representations and warranties contained therein, are not for the benefit
of any party other than the parties to such agreements, and are not intended as documents for investors and the public to obtain
factual information about the current state of affairs of the parties to those documents and their agreements.
In connection with the Offering, the Company
and the Final Closing Investor entered into a Registration Rights Agreement (the “
Registration Rights Agreement
”).
Pursuant to the Registration Rights Agreement, the Company shall prepare and, as soon as practicable, but in no event later than
30 days from the date of the closing of the Offering, file with the Securities and Exchange Commission (the “
SEC
”)
an initial Registration Statement on Form S-3 covering the resale of all shares of Common Stock comprising the Units, including
shares of Common Stock underlying the Warrants, or the largest amount thereof permissible. The Company shall use its best efforts
to have such initial Registration Statement, and each other Registration Statement required to be filed pursuant to the terms of
the Registration Rights Agreement, declared effective by the SEC as soon as practicable.
The above description of the Warrants, Securities
Purchase Agreements and Registration Rights Agreement do not purport to be complete and are qualified in their entirety by the
full text of the forms of such documents, which are provided as exhibits to this Current Report on Form 8-K and incorporated herein
by reference.