10. Subsequent Events

On July 22, 2022, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with Ladenburg Thalmann & Co. Inc., as underwriter (the “Underwriter”), pursuant to which the Company agreed to issue and sell, in a firm commitment underwritten public offering by the Company (the “Public Offering”), (i) 19,770,172 shares of common stock (the “Common Shares”), (ii) 1,280 shares of Series E Convertible Preferred Stock (the “Preferred Shares”) convertible into up to 6,400,000 shares of common stock, (iii) Class A Warrants (the “Class A Warrants”) to purchase up to 26,170,172 shares of common stock, and (iv) Class B Warrants to purchase up to 26,170,172 shares of common stock (the “Class B Warrants” and, together with the Class A Warrants, the “Warrants”), priced at a public offering price of $0.20 per Common Shares, Class A Warrants and Class B Warrants or $1,000 per Preferred Share, 5,000 Class A Warrants and 5,000 Class B Warrants. In addition, pursuant to the Underwriting Agreement, the Company granted the Underwriter a 45-day option (the “Overallotment Option”) to purchase up to (i) 3,925,525 additional Common Shares, (ii) 3,925,525 additional Class A Warrants and/or (ii) 3,925,525 additional Class B Warrants, solely to cover over-allotments. The Underwriter fully exercised the Overallotment Option on July 25, 2022. The securities were offered by the Company pursuant to the Registration Statement on Form S-1 (File No. 333-264641), which was initially filed with the Securities and Exchange Commission (the “Commission”) on May 3, 2022, amended on July 13, 2022, July 19, 2022 and July 21, 2022, and declared effective by the Commission on July 21, 2022.

On July 26, 2022, the Public Offering closed, and the Company issued and sold (i) 23,695,697 Common Shares, (ii) 1,280 Preferred Shares, (iii) 30,095,697 Class A Warrants, and (iv) 30,095,697 Class B Warrants. The Company received net proceeds of approximately $5.297 million net of underwriting discount and commissions of $0.435 million and expense of $0.287 million. The exercise price for Class A and Class B warrants was $0.20 per share.

During July 2022, the Company became aware of an apparent payroll irregularity that occurred in June 2022 and resulting in approximately $0.120 million being paid to unauthorized recipients.  The Company promptly retained an independent firm to investigate the irregularity and to review the Company’s internal control over financial reporting in light of the irregularity.

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