Series A Preferred Financing

August 2, 2017,

the Company issued and sold

22,000

shares of the Company’s Series A Convertible Preferred Stock, par value of

$0.001

per share (the “Series A Preferred”), for a purchase price of

$1,000

per share, or aggregate purchase price and gross proceeds of

$22.0

million, all upon the terms and conditions set forth in the Securities Purchase Agreement dated as of

June 22, 2017.

The Company incurred

$0.5

million of issuance costs in connection with the transaction. Each share of Series A Preferred is convertible into approximately

1,005

shares of the Company’s Common Stock at a conversion price of

$0.9949

per share, in each case subject to adjustment for any stock splits, stock dividends and similar events, provided that any conversion of Series A Preferred by a holder into shares of Common Stock is prohibited if, as a result of such conversion, the holder, together with its affiliates and any other person or entity whose beneficial ownership of the Company’s Common Stock would be aggregated with such holder’s for purposes of Section

(d) of the Securities Exchange Act of

1934,

as amended (the “Exchange Act”) would beneficially own more than

9.985%

of the total number of shares of Common Stock issued and outstanding after giving effect to such conversion.

Upon issuance, each share of Series A Preferred included an embedded beneficial conversion feature as the market price of the Company’s Common Stock on the date of issuance of the Series A Preferred was

$1.30

per share. As a result, the Company recorded the intrinsic value of the beneficial conversion feature of

$6.7

million as a discount on the Series A Preferred at issuance. As the Series A Preferred is immediately convertible upon issuance and does

not

include a stated redemption date, the discount on the Series A Preferred was immediately accreted.

The Company evaluated the Series A Preferred for liability or equity classification in accordance with the provisions of ASC

480,

Distinguishing Liabilities from Equity, and determined that equity treatment was appropriate because the Series A Preferred did

not

meet the definition of the liability instruments defined thereunder for convertible instruments. Specifically, the Series A Preferred are

not

mandatorily redeemable and do

not

embody an obligation to buy back the shares outside of the Company’s control in a manner that could require the transfer of assets. Additionally, the Company determined that the Series A Preferred would be recorded as permanent equity,

not

temporary equity, based on the guidance of ASC

480

given that there is

scenario where the holders of equally and more subordinated equity of the entity would

not

be entitled to also receive the same form of consideration upon the occurrence of the event that gives rise to the redemption.