On August 14, 2019, we entered into the Securities Purchase Agreement (“SPA”) with the Preferred Purchasers, pursuant to which we agreed to issue and sell to the Preferred Purchasers up to an aggregate of 6,000 shares of Series A Preferred Stock (which, at the initial conversion price, were convertible into an aggregate of up to approximately 3.87 million shares of common stock) and warrants (“Series A” warrants) to purchase 3.2 million shares of common stock. The Company closed the offering on August 14, 2019 and issued 5,030 shares of Series A Preferred Stock and granted Series A warrants to purchase up to 3,245,162 shares of common stock. We received proceeds of $4,688,000, net of direct costs of $342,000. The offering was made in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended, as a transaction by an issuer not involving any public offering.

On September 17, 2019, we filed a registration statement on Form S-3 with the SEC to register the shares of common stock underlying the Series A warrants. The registration statement was declared effective on September 19, 2019 and we agreed to keep such registration statement continuously effective for a period of 24 months.

We are also prevented from issuing shares of common stock upon exercise of the Series A Warrants, which, when aggregated with any shares of common stock issued on or after the issuance date and prior to such exercise date, (i) in connection with the exercise of any Series A Warrants issued pursuant to the SPA, and (ii) in connection with the exercise of any warrants issued to any registered broker-dealer as a fee in connection with the issuance of the securities pursuant to the SPA, would exceed 4,459,725 shares of common stock (the “19.99% Cap”). This prohibition will terminate upon the approval by our stockholders of a release from such 19.99% Cap.

The Series A Warrants have an initial exercise price of $1.88 per share, subject to customary adjustments, are exercisable six months after the date of issuance, and will expire five years from the date of issuance. The exercise price is subject to certain customary adjustments, including upon certain subsequent equity sales and rights offerings. In addition, the Series A Warrants included a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder. As a result, the Series A Warrants were accounted for as a derivative liability issuance in 2019 and are remeasured to fair value at the end of each reporting period (see Note 14).

During the year ended December 31, 2021, the entire 2,006 shares of Preferred Stock were converted into 1,978,728 shares of Common Stock, which included 155,087 shares of common stock issued as a contractual inducement to convert with a fair value of $348,000. Pursuant to current accounting guidelines, the Company recorded the fair value of $348,000 as a deemed dividend. As of December 31, 2021, there are no shares of Series A Preferred stock issued and outstanding.

During the year ended December 31, 2020, 2,390 shares of Preferred Stock were converted into 1,768,909 shares of common stock, pursuant to the original terms of the SPA, as amended. As of December 31, 2020, 2,006 shares Series A Preferred stock were outstanding.