Additional Shares Issued

On July 3 and July 7, 2017 the remaining 1,200,000 of the 2,600,000 Pre-funded Warrants were exercised for the $.01 per warrant exercise price. Accordingly, all 2,600,000 common shares related to the warrants have been issued.

On July 31, 2017 the Underwriters exercised their right to purchase 875,000 common shares at $1.09 per share for $0.960 million net of $0.072 million in underwriter discounts, or $0.882 million. This was a partial exercise of their over-allotment option of 1,875,000 available shares. The right to purchase the remaining overallotment of 1,000,000 shares expired on July 31, 2017.

Nasdaq Correspondence

On July 31, 2017, (the “Company received written notice (the “Notification Letter”) from the Listing Qualifications Department of The NASDAQ Stock Market LLC (“Nasdaq”) notifying the Company that it is not in compliance with the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of thirty (30) consecutive business days. Based on the closing bid price of the Company’s common stock for the thirty (30) consecutive business days prior to the date of the Notification Letter, the Company no longer meets the minimum bid price requirement.

The Notification Letter does not impact the Company's listing on The Nasdaq Capital Market at this time. The Notification Letter states that the Company has 180 calendar days, or until January 29, 2018, to regain compliance with Nasdaq Listing Rule 5550(a)(2). To regain compliance, the bid price of the Company's common stock must have a closing bid price of at least $1.00 per share for a minimum of 10 consecutive business days. In the event that the Company does not regain compliance by January 29, 2018, the Company may be eligible for additional time to reach compliance with the minimum bid price requirement.

The Notification Letter does not impact the Company’s listing on The Nasdaq Capital Market at this time. The Notification Letter states that the Company has 180 calendar days, or until January 29, 2018, to regain compliance with Nasdaq Listing Rule 5550(a)(2). To regain compliance, the bid price of the Company’s common stock must have a closing bid price of at least $1.00 per share for a minimum of 10 consecutive business days. In the event that the Company does not regain compliance by January 29, 2018, the Company may be eligible for additional time to reach compliance with the minimum bid price requirement.

In addition, we note that we are not currently in compliance with NASDAQ Listing Rule 5605(c)(2)(A), which requires the Audit Committee to be comprised of at least three members. We intend to appoint an additional independent director to our Board and to the Audit Committee prior to the Company’s 2017 Annual Meeting of Stockholders.