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

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

$39.80

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 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. At

December 31, 2019

and

2018,

the Company had

22,000

shares of Series A Convertible Preferred Stock authorized.

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. During the year ended

December 31, 2019,

3,046

shares of the Series A convertible preferred stock were converted into

76,540

shares of Common Stock. The Company had issued and outstanding

18,954

and

22,000

share of Series A Convertible Preferred Stock with a par value of

$0.001

December 31, 2019

and

2018,

respectively. On

January 9, 2020,

18,954

shares of Series A Convertible Preferred Stock were converted into

476,276

shares of Common Stock.

Dividends

Holders of the Series A Preferred Stock are entitled to receive dividends, if and when declared by the Board of Directors.

Liquidation Preference

Holders of the Series A Preferred Stock have preference in the event of a liquidation or dissolution of the Company equal to

$0.001

per share, plus any declared dividends.

Thereafter, the Holders of the shares of Series A Preferred Stock shall share ratably in any distributions and payments of any remaining assets of the Company, on an as converted basis, with the holders of Common Stock.

Voting Rights

Except for matters with specific voting rights as provided in the Series A Preferred Stock Purchase Agreement, the Holders of shares of Series A Preferred Stock have

voting rights.