. Common Stock

May 19, 2017,

the Company issued

35,000

restricted shares of its common stock at a value of

$7.42

a share, or an aggregate value of approximately

$260,000.

March 22, 2017,

in connection with the closing of the

March 2017

Offering, we issued an aggregate of

8,625,000

shares of common stock, including the exercise of the underwriters

’ overallotment option, at a public offering price of

$4.00

per share for gross proceeds of approximately

$34,500,000.

The net proceeds to the Company, after the deduction of underwriting discounts, commissions and other offering expenses, were approximately

$31,440,000.

June 17, 2016,

in connection with the closing of the

June 2016

Offering, we issued an aggregate of

3,105,000

shares of common stock, including the exercise of the underwriters

’ overallotment option, at a public offering price of

$5.00

per share for gross proceeds of approximately

$15,525,000.

The net proceeds to the Company, after the deduction of underwriting discounts, commissions and other offering expenses, were approximately

$13,886,000.

Warrants for Common Stock

As of

September 30, 2017,

outstanding warrants to purchase shares of common stock were as follows:

					Number of
					Shares
					Outstanding
	Exercisable	Expiration	Exercise		Under
Issuance Date	for	Date	Price		Warrants

September 2014	Common Shares	September 23, 2019	$	4.24		86,831
October 2014	Common Shares	October 13, 2019	$	4.24		29,000
November 2014	Common Shares	November 12, 2019	$	4.24		12,500
February 2015	Common Shares	February 17, 2025	$	4.00		75,697
March 2015	Common Shares	March 26, 2025	$	2.72		1,454
May 2015	Common Shares	May 12, 2025	$	4.24		36,229
May 2015	Common Shares	May 17, 2020	$	4.24		21,585
December 2015	Common Shares	December 16, 2025	$	5.60		26,875
April 2016	Common Shares	April 1, 2026	$	6.08		25,000
May 2016	Common Shares	May 11, 2021	$	7.74		5,000
June 2016	Common Shares	June 20, 2026	$	4.98		100,402
May 2017	Common Shares	May 25, 2027	$	9.50		222,049
						642,622

In connection with the Loan and Security Agreement entered into on

September 30, 2014,

as amended on

February 19, 2015,

May 14, 2015,

November 30, 2015

and

March 18, 2016 (

collectively, the

“2014

Loan Agreement”), with Pacific Western Bank (as succes

sor in interest by merger to Square

Bank), the Company issued a warrant to purchase a total of

58,962

shares of common stock at an exercise price of

$4.24

per share. The fair value of the warrant was recorded as debt issuance costs, presented in the condensed consolidated balance sheets as a deduction from the carrying amount of the note payable, and was being amortized to interest expense over the loan term. The outstanding indebtedness was repaid in

June 2016

from the proceeds of the new term loan in connection with the

2016

Loan Agreement and the remaining unamortized balance of debt issuance costs was recorded to interest expense for the quarter ended

June 30, 2016.

During the

three

and

nine

months ended

September 30, 2016,

the Company recorded

zero

and

$387,000,

respectively, of interest expense relating to the debt issuance costs. The warrant was exercised on a cashless basis in

August 2016

and

17,295

net shares were issued.

In conjunction with the

second

amendment to the

2014

Loan Agreement in

May 2015,

the Company issued a warrant to the

lender to purchase a total of

3,125

shares of common stock at an exercise price of

$2.96

per share. The debt issuance costs for this warrant were fully amortized as of

September 30, 2015.

The warrant was exercised on a cashless basis in

July 2016

and

885

net shares of common stock were issued.

In connection with the

2016

Loan Agreement, the Company issued a warrant to purchase a total of

100,402

shares of common stock at an exercise price of

$4.98

per share. The Company determined the fair value of the warrant on the date of issuance to be

$350,000.

The fair value along with legal fees totaling

$90,000,

was recorded as debt issuance costs and was amortized to interest expense over the loan term. The debt issuance costs were presented in the condensed consolidated balance sheet as a deduction from the carrying amount of the note payable. The outstanding indebtedness was repaid in

May 2017

from the proceeds of the term loan made in connection with the

2017

Loan Agreement and the remaining unamortized balance of debt issuance costs was recorded to interest expense for the

three

months ended

June 30, 2017.

During the

three

and

nine

months ended

September 30, 2017,

the Company recorded

zero

and

$371,000

respectively, of interest expense relating to the debt issuance costs. During the

three

and

nine

months ended

September 30, 2016,

the Company recorded

$35,000

interest expense relating to the debt issuance costs. As of

September 30, 2017,

the unamortized debt discount related to the

2016

Loan Agreement was

zero

In connection with the

2017

Loan Agreement, the Company issued warrants to purchase a total of

222,049,

shares of common stock at an exercise price of

$9.50

per share. The warrants have a contractual life of

ten

years and are exercisable immediately

in whole or in part. The Company determined the fair value of the warrants on the date of issuance to be

$940,000

using the Black-Scholes option pricing model. Assumptions used were dividend yield of

0%,

volatility of

55.1%,

risk free interest rate of

2.25%

and a contractual life of

ten

years. The fair value of the warrants along with financing and legal fees totaling

$786,000,

are recorded as debt issuance costs and presented in the condensed consolidated balance sheets as a deduction from the carrying amount of the note payable. The debt issuance costs will be amortized to interest expense over the loan term. During the

three

and

nine

months ended

September 30, 2017,

the Company recorded

$68,000

and

$106,000

of interest expense relating to the debt issuance costs using the effective interest method. As of

September 30, 2017,

the unamortized debt discount was

$1,620,000.

A total of

4,701

and

25,268

shares, issuable pursuant to warrants issued in connection with a private offering on

September 30, 2014,

were issued in connection with the exercise of warrants during the

nine

months ended

September 30, 2017

and

2016,

respectively.

shares issuable pursuant to warrants have been cancelled during the

nine

months ended

September 30, 2017.

A total of

1,094

shares issuable pursuant to warrants issued to

two

vendors in

October 2014

were cancelled during the

nine

months ended

September 30, 2016

as the milestones related to these shares were

not

achieved.

The stock-based compensation expense related to warrants issued was

zero

for

both the

three

months ended

September 30, 2017

and

2016.

The stock-based compensation expense related to warrants issued was

zero

and

$162,000

for the

nine

months ended

September 30, 2017

and

2016,

respectively.