NOTE 12 — SUBSEQUENT EVENTS

Exercise of Series C Warrants and Series D Warrants

From October 1, 2015 through November 13, 2015, 2,250,000 of the Series C Warrants issued in our August 2015 underwritten public offering have been exercised into 2,250,000 Class A Units, consisting of 2,250,000 shares of common stock and 1,125,000 Series A Warrants, at an exercise price of $0.2518 per share.

From October 1, 2015 through November 13, 2015, 2,536,950 of the Series D Warrants issued in our August 2015 underwritten public offering have been exercised into 2,536,950 Class B Units, consisting of 2,536,950 Series B Warrants and 1,268,475 Series A Warrants, at an exercise price of $0.2518 per share. Of such Series B Warrants issued, 187,500 were exercised into 187,500 shares of common stock.

The expiration date of the remaining unexercised Series C Warrants and Series D Warrants is November 19, 2015.

Settlement with Holders of Series B Warrants

On November 2, 2015, the Company entered into a Settlement Agreement and Mutual Release (the “Agreement”) with certain holders (the “Holders”) of the Company’s Series B Warrants to purchase common stock (the “Original Warrants”), issued in connection with the August 2015 underwritten offering. Upon the consummation of the Agreement, in full and complete satisfaction of all claims that the Holders made or could have made against the Company arising in connection with the Original Warrants, the Company delivered to the Holders new warrants initially exercisable to purchase, in the aggregate, two million four hundred fifty thousand (2,450,000) shares of the Company’s common stock, par value $0.00001, at an exercise price of $0.75 per share with an expiration date of November 2, 2018, as set forth in the Agreement.

Settlement of Amounts Due to Related Parties

In October 2015, George Schmitt, Chief Executive Officer and Chairman of the Board, agreed to convert $500,000 of existing loans due from the Company into 892,858 shares of the Company’s common stock with a grant date fair value of approximately $500,000.

Shares Issued Under S-8 Registration Statement

From October 1, 2015 to November 16, 2015, the Company issued 73,877 shares of common stock to employees in lieu of paying $44,778 of payroll due to cost cutting measures and 39,264 shares of common stock to various consultants to pay $23,165 worth of services. As of November 16, 2015, a total of 100,129 registered shares remain under the August 20, 2015 S-8 Registration Statement.