Quarterly report pursuant to Section 13 or 15(d)

Share Holders Equity (Deficit)

Share Holders Equity (Deficit)
6 Months Ended
Jun. 30, 2019
Equity [Abstract]  



Stock Offerings


On June 4, 2018, the Company and holders of all outstanding Warrants to Purchase Common Stock of the Company issued on September 18, 2017 (collectively, the "Warrants") entered into separate, privately-negotiated exchange agreements (the "Exchange Agreements"), pursuant to which the Company issued an aggregate of 1,968,736 shares of the Company's common stock in exchange for the Warrants. In addition, the "Down Round" feature of the Warrants was triggered in the second quarter of 2018, causing the strike price to decrease from $3.80 per share to $2.62 per share. As a result, the Company recorded a deemed dividend of $765,179 which represents the fair value transferred to the Warrant holders from the Down Round being triggered. The deemed dividend was recorded as a reduction of Retained Earnings and increase in Additional Paid-in-Capital and reduced net income available to common shareholders by the same amount.


Commencing February 11, 2019, the Company entered into and closed Subscription Agreements with accredited investors (the "February 2019 Accredited Investors") for the purchase of 1,613,683 shares of the Company's common stock for a purchase price of $1,465,056. If, prior to the six month anniversary, the Company issues shares of its common stock for a purchase price per share less than the purchase price paid by the February 2019 Accredited Investors (a "Down Round"), the Company will issue additional shares of common stock (for no additional consideration) such that the effective purchase price per share is equal to the purchase price per share paid in the Down Round. The Down Round provisions were triggered by the May 1, 2019 sale of common stock and an additional 116,496 shares of common stock were issued to the February 2019 Accredited Investors. The issuance of the additional shares is accounted for as a $86,207 deemed dividend.


Benjamin Samuels and Gerald Budde, directors of the Company, acquired 841,928 and 26,310 shares of common stock, respectively, as part of this offering at a per share purchase was $0.9501, which was above the closing price the date prior to close. They did not receive the Down Round protection.


On May 1, 2019, the Company closed under a registered public offering the sale of 3,957,432 shares of Common Stock for a purchase price of $0.74 per share. The net proceeds to the Company were approximately $2.9 million, after deducting estimated expenses payable by the Company. The Company expects to use the net proceeds from this offering for working capital, general corporate purposes and repayment of debt and other obligations.




In connection with the issuance of debt and preferred stock, the Company has issued warrants to purchase share of Common Stock.


The following table summarizes warrant activity for the period:


    Number of Warrants   Weighted Average Exercise Price per Warrant   Weighted Average Remaining Exercise Term in Months
Balance, December 31, 2018     17,818,844     $ 1.84       52  
Granted, Series B Preferred Stock     9,262,500       1.62       48  
Granted, Marathon debt     1,840,275       1.40       60  
Exercised     -                    
Balance, June 30, 2019     28,921,619     $ 2.58       69