| (3) |
The registrant may issue up to an aggregate of 2,400,000 shares of Series
D Convertible Preferred Stock, par value $0.001 per share (the “Offered Preferred Stock”) and warrants (the “Warrants”)
to purchase up to 2,400,000 shares of our Series D Convertible Preferred Stock, par value $0.001 per share. Each share of Offered Preferred
Stock sold in the offering will be accompanied by one Warrant to purchase one share of Series D Convertible Preferred Stock. The shares
of Offered Preferred Stock and the Warrants will be issued separately but can only be purchased together in this offering. The Offered
Preferred Stock and the Warrants will be convertible and exercisable, as the case may be, immediately upon issuance, and the Warrants
will expire on the fifth anniversary of the initial issuance date. The Offered Preferred Stock will be convertible at an assumed initial
conversion price of $5 per share (“the “Conversion Price”) and the Warrants will be exercisable at an assumed initial
exercise price of $5 per share. The initial public offering by the registrant also relates to: (a) up to 2,400,000 shares of common stock
issuable upon the conversion of the Offered Preferred Stock, (b) up to 1,080,000 shares of common stock representing payment of dividends
accrued on the Offered Preferred Stock in shares of common stock upon conversion of the Offered Preferred Stock, (c) up to 2,400,000 shares
of Series D Convertible Preferred Stock issuable upon exercise of the Warrants (such shares of Series D Convertible Preferred Stock, the
“Warrant Preferred Stock”), (d) up to 2,400,000 shares of common stock issuable from time to time upon the conversion of the
Warrant Preferred Stock, (e) up to 1,080,000 shares of common stock representing payment of dividends accrued on the Warrant Preferred
Stock in shares of common stock upon conversion of the Warrant Preferred Stock, and (f) up to 120,000 additional shares of common stock
issuable from time to time upon conversion of the Series D Convertible Preferred Stock sold hereunder if the conversion price is lower
than the initial conversion price of $5 per share. |