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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b>Organization and Nature of Business</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">Ocata Therapeutics, Inc., and Subsidiary
(the “Company”) is a clinical stage biotechnology company focused on the development and commercialization of Regenerative
Ophthalmology<sup>TM</sup> therapeutics. The most advanced products are in clinical trials for the treatment of Stargardt’s
macular degeneration, dry age-related macular degeneration, and myopic macular degeneration. The Company is also developing several
pre-clinical terminally differentiated-cell therapies for the treatment of other ocular disorders. Additionally, the Company has
a number of pre-clinical stage programs in disease areas outside the field of ophthalmology, including autoimmune, inflammatory
and wound healing-related disorders. The Company’s intellectual property portfolio includes pluripotent human embryonic
stem cell, or hESC; induced pluripotent stem cell, or iPSC, platforms; and other cell therapy technologies. The Company has no
therapeutic products currently available for sale and does not expect to have any therapeutic products commercially available
for sale for a period of years, if at all. These factors indicate that the Company’s ability to continue research and development
activities is dependent upon the ability of management to obtain additional financing as required.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The Company pursues a number of approaches
to generating transplantable tissues both in-house and through collaborations with other researchers who have particular interests
in, and skills related to, cellular differentiation. The Company’s research in this area includes projects focusing on the
development of many different cell types that may be used to treat a range of diseases within ophthalmology and other therapeutic
areas. Control of cellular differentiation and the culture and growth of stem and differentiated cells are important areas of
research and development for the Company. Based on the success to date of the Phase 1 clinical trials and what the Company sees
as favorable market dynamics of the ophthalmology sector, the Company’s strategic focus is primarily on the development,
and ultimate commercialization of ophthalmology therapies. The largest indication involving macular degeneration is “age-related
macular degeneration,” or AMD. AMD is the leading cause of blindness and visual impairment in adults over fifty years of
age. The Company is also pursuing a treatment for Stargardt’s Macular Degeneration, or SMD, an inherited juvenile onset
form of macular degeneration. The Company initiated the Phase 2 clinical trial for dry AMD in the third quarter of this year.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Basis of Presentation</i></b>
— The Company follows accounting standards set by the Financial Accounting Standards Board (“FASB”). The accompanying
consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America, GAAP. References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codification™,
sometimes referred to as the Codification or “ASC.” Although the Company believes that the disclosures in these financial
statements are adequate to make the information presented not misleading, certain information normally included in the footnotes
prepared in accordance with GAAP has been omitted as permitted by the rules and regulations of the Securities and Exchange Commission
(“SEC”).  The accompanying financial statements should be read in conjunction with the audited financial statements
and notes thereto included in the Company’s Annual Report on Form 10−K for the fiscal year ended December 31, 2014
filed with the SEC on March 16, 2015.  The results for the three and nine month periods ended September 30, 2015 are not
necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2015, or any future period.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The accompanying consolidated financial
statements have been prepared in conformity with GAAP which contemplate continuation of the Company as a going concern. Management’s
plans to continue as a going concern contemplate raising additional capital including the debt financing completed in the third
quarter of 2015 that resulted in approximately $6.0 million in net proceeds, the execution of an underwritten secondary offering
completed in the second quarter of 2015 that resulted in approximately $28.4 million in net proceeds, and the prior execution
of an agreement for a $30 million equity line in June 2014, of which approximately $5.8 million remains available as of September
30, 2015. The Company believes that its current cash balance, and the approximately $5.8 million available under the Lincoln Park
financing arrangement as of September 30, 2015, will be sufficient to fund operations into the second half of 2016. The Company,
as part of the debt financing completed in the third quarter of 2015, has the option, subject to the terms and conditions of the
Loan and Security Agreement described in Note 7, to exercise an additional term loan totaling $4.0 million. There can be no assurances
that management can raise the necessary additional capital on favorable terms or at all. The accompanying financial statements
do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Principles of Consolidation
</i></b>— The accounts of the Company and its wholly-owned subsidiary Mytogen, Inc. are included in the accompanying
consolidated financial statements. All intercompany balances and transactions were eliminated in consolidation.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Segment Reporting </i></b>—
ASC 280, <i>Segment Reporting</i> requires use of the “management approach” model for segment reporting. The management
approach model is based on the way a company’s management organizes segments within the company for making operating decisions
and assessing performance. The Company determined it has one operating segment.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Use of Estimates</i></b> —
These consolidated financial statements have been prepared in accordance with GAAP and, accordingly, require management to make
estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. In addition, management has estimated variables used
to calculate the Black-Scholes option pricing model used to value derivative instruments, including outstanding warrants. Also,
management has estimated the expected economic life and value of the Company’s licensed technology, the Company’s
net operating loss for tax purposes, share-based payments for compensation to employees, directors, consultants and investment
banks, and the useful lives of the Company’s fixed assets. Actual results could differ from those estimates.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Cash and Cash Equivalents</i></b>
— Cash equivalents are comprised of certain highly liquid investments with maturities of three months or less when purchased.
The Company maintains its cash in bank deposit accounts, which at times, may exceed federally insured limits. The Company has
not experienced any losses related to this concentration of risk. As of September 30, 2015 and December 31, 2014, the Company
had deposits in excess of federally-insured limits totaling $31,887,435 and $4,325,886, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Commitments and Contingencies
</i></b>— The Company recognizes liabilities for contingencies and commitments when a loss is probable and can be reasonably
estimated.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">Relating to loss contingencies the
Company accrues the best estimate of a loss within a range. If no estimate in a range is better than any other, the minimum amount
is accrued. The Company discloses a reasonably possible loss in excess of the amount accrued, if applicable. For reasonably possible
loss contingencies, the Company discloses the nature of the loss contingency and provides a range of the estimate of possible
loss or state that an estimate cannot be made.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">Included in the other liabilities
balance as of December 31, 2014 is approximately $1,200,000, primarily related to the acquisition of Mytogen which the Company
did not expect to settle during 2015. This balance was reclassified to the accounts payable balance as of September 30, 2015 as
the Company expects to settle these payables in the near-term.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Grants Receivable</i></b> —
The Company periodically assesses its grants receivable for collectability on a specific identification basis. If collectability
of an account becomes unlikely, the Company records an allowance for that doubtful account. Once the Company has exhausted efforts
to collect, management writes off the grants receivable against the allowance it has already created.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Property and Equipment</i></b>
— The Company records its property and equipment at historical cost. The Company expenses maintenance and repairs as incurred.
Upon disposition of property and equipment, the gross cost and accumulated depreciation are written off and the difference between
the proceeds and the net book value is recorded as a gain or loss on sale of assets. In the case of certain assets acquired under
capital leases, the assets are recorded net of imputed interest, based upon the net present value of future payments. Assets under
capital lease are pledged as collateral for the related lease.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The Company provides for depreciation
over the assets’ estimated useful lives as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
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<td><font style="font: 8pt Times New Roman, Times, Serif">Lesser of lease life or economic life</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Patents</i></b> — The
Company follows ASC 350-30, <i>General Intangibles Other than Goodwill </i>(“ASC 350-30”), in accounting for its patents.
ASC 350-30 provides that costs of internally developing, maintaining, or restoring intangible assets that are not specifically
identifiable, that have indeterminate lives, or that are inherent in a continuing business and related to an entity as a whole,
shall be recognized as an expense when incurred. The Company has expensed as research and development expense all costs associated
with developing its patents.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Equity Method Investment</i></b>
— The Company follows ASC 323, <i>Investments-Equity Method and Joint Ventures, </i>in accounting for its investment in
the joint venture. In the event the Company’s share of the joint venture’s net losses reduces the Company’s
investment to zero, the Company will discontinue applying the equity method and will not provide for additional losses unless
the Company has guaranteed obligations of the joint venture or is otherwise committed to provide further financial support for
the joint venture. If the joint venture subsequently reports net income, the Company will resume applying the equity method only
after its share of that net income equals the share of net losses not recognized during the period the equity method was suspended.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Long-Lived Assets</i></b>—
The Company follows ASC 360-10, <i>Property, Plant, and Equipment, </i>which established a “primary asset” approach
to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for
a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset
is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition
of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.
For the nine months ended September 30, 2015, the Company had not experienced impairment losses on its long-lived assets.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Fair Value Measurements</i>
—</b> The Company applies the provisions of ASC 820-10, <i>Fair Value Measurements and Disclosures </i>(“ASC 820-10”)<i>.
</i>ASC 820-10 defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement
that enhances disclosure requirements for fair value measures. For certain financial instruments, including cash and cash equivalents,
grants receivable, prepaid expenses, accounts payable and accrued expenses, the carrying amounts approximate fair value due to
their relatively short maturities. The carrying amount of senior secured convertible debentures approximated fair value as the
interest rate charged on the debentures was based on the prevailing rate. The three levels of valuation hierarchy are defined
as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 24px"><font style="font-size: 8pt"> </font></td>
<td style="width: 24px"><font style="font: 8pt Symbol">·</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">Level 1 inputs to the valuation methodology are quoted prices for
identical assets or liabilities in active markets.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 24px"><font style="font-size: 8pt"> </font></td>
<td style="width: 24px"><font style="font: 8pt Symbol">·</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">Level 2 inputs to the valuation methodology include quoted prices
for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly
or indirectly, for substantially the full term of the financial instrument.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 24px"><font style="font-size: 8pt"> </font></td>
<td style="width: 24px"><font style="font: 8pt Symbol">·</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">Level 3 inputs to the valuation methodology are unobservable and
significant to the fair value measurement.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The Company analyzes all financial
instruments with features of both liabilities and equity under ASC 480, <i>Distinguishing Liabilities from Equity, </i>and ASC
815, <i>Derivatives and Hedging.</i> Derivative liabilities are adjusted to reflect fair value at each period end, with any increase
or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives. The effects
of interactions between embedded derivatives are calculated and accounted for in arriving at the overall fair value of the financial
instruments. In addition, the fair values of freestanding derivative instruments such as warrant derivatives are valued using
the Black-Scholes model.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The Company uses Level 3 inputs for
its valuation methodology for the fair value of certain embedded conversion options and other warrant derivative liabilities.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 24px"><font style="font-size: 8pt"> </font></td>
<td style="width: 24px"><font style="font: 8pt Symbol">·</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">The expected volatility of the Company’s common stock is estimated
from the historical volatility of daily returns in the Company’s common stock price. The Company monitors the volatility
of its common stock on a quarterly basis to observe trends that may impact the fair value of the notes.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 24px"><font style="font-size: 8pt"> </font></td>
<td style="width: 24px"><font style="font: 8pt Symbol">·</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">The discount for illiquidity is measured using an average-strike
option that calculates the discount as the opportunity cost for not being able to sell a large block of the Company’s
common stock immediately at prevailing observable market prices. Inputs to the average-strike option model include the expected
volatility of the Company’s common stock and time to sell a large block of the Company’s stock as Level 3 inputs
and other observable inputs. The time to sell the stock is estimated considering the historical daily trading volume of our
common stock and market maker estimates of the amount of shares that can be offered for sale above the daily trading volume
without depressing the price of the Company’s common stock.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">At September 30, 2015, the Company
identified the following assets and liabilities that are required to be presented on the balance sheet at fair value:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Description</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Fair
Value </font><font style="font-size: 8pt"><br />
<font style="font-family: Times New Roman, Times, Serif">As of</font><br />
<font style="font-family: Times New Roman, Times, Serif">September 30, 2015</font></font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="10" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Fair
Value Measurements at</font><font style="font-size: 8pt"><br />
<font style="font-family: Times New Roman, Times, Serif">September 30, 2015</font><br />
<font style="font-family: Times New Roman, Times, Serif">Using Fair Value Hierarchy</font></font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 37%"><font style="font: 8pt Times New Roman, Times, Serif">Warrant liabilities</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$ </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; width: 13%"><font style="font: 8pt Times New Roman, Times, Serif">7,843,106</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; width: 13%"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; width: 13%"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; width: 13%"><font style="font: 8pt Times New Roman, Times, Serif">7,843,106</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Total</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7,843,106</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">      <font style="font-family: Times New Roman, Times, Serif">–</font></font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">      <font style="font-family: Times New Roman, Times, Serif">–</font></font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7,843,106</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The following tables reconcile the
change in fair value for measurements categorized within Level 3 of the fair value hierarchy:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Warrant
Liabilities</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 84%"><font style="font: 8pt Times New Roman, Times, Serif">Balance at December 31, 2014</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">16,255</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Addition of warrant liability</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">11,140,771</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font: 8pt Times New Roman, Times, Serif">Total change in fair value for the period included in earnings</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(3,313,920)</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Balance at September 30, 2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7,843,106</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Warrant
Overallotment Liabilities</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 84%"><font style="font: 8pt Times New Roman, Times, Serif">Balance at December 31, 2014</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Addition of warrant overallotment liability</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">628,767</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font: 8pt Times New Roman, Times, Serif">Total change in fair value for the period included in earnings</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(628,767)</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Balance at September 30, 2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">Gains included in earnings for the
nine months ended September 30, 2015 are reported as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Adjustments
to fair value of derivatives</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 84%"><font style="font: 8pt Times New Roman, Times, Serif">Total gain included in earnings</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; width: 13%"><font style="font: 8pt Times New Roman, Times, Serif">3,313,920</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The following table provides quantitative
information about measurements categorized within Level 3 of the fair value hierarchy:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="width: 28%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 13%; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Fair Value at</font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 14%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 28%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 13%"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">September 30,</font></td>
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Valuation</font></td>
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Description</font></td>
<td nowrap="nowrap" style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">2015</font></td>
<td nowrap="nowrap" style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Technique</font></td>
<td nowrap="nowrap" style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Unobservable
Input</font></td>
<td nowrap="nowrap" style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Value</font></td></tr>
<tr style="background-color: rgb(238,238,238)">
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Warrant derivative liabilities</font></td>
<td nowrap="nowrap" style="vertical-align: bottom"><font style="font-size: 8pt"> </font></td>
<td style="vertical-align: top; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">$7,843,106 </font></td>
<td nowrap="nowrap" style="vertical-align: bottom"><font style="font-size: 8pt"> </font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">Black Scholes Model</font></td>
<td nowrap="nowrap" style="vertical-align: bottom"><font style="font-size: 8pt"> </font></td>
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Expected volatility of the Company's
common stock</font></td>
<td nowrap="nowrap" style="vertical-align: bottom"><font style="font-size: 8pt"> </font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">69% - 92%</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">For the three and nine months ended
September 30, 2015, the Company recognized gains of $3,598,946 and $3,942,687, respectively, for the changes in the valuation
of derivative liabilities. For the three and nine months ended September 30, 2014, the Company recognized gains of $42,207 and
$719,007, respectively, for the changes in the valuation of derivative liabilities.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The Company did not identify any non-recurring
assets and liabilities that were recorded at fair value during the periods presented.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Revenue Recognition</i></b>
<b><i>and Deferred Revenue</i> —</b> The Company’s revenues are primarily generated from license and research agreements
with collaborators. Licensing revenue is recognized on a straight-line basis over the shorter of the life of the license or the
estimated economic life of the patents related to the license.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">License fee revenue begins to be recognized
in the first full month following the effective date of the license agreement. Deferred revenue represents the portion of the
license and other payments received that has not been earned. Costs associated with license revenue are deferred and recognized
over the same term as the revenue. Revenue pursuant to grants are recorded in the period during which expenses are incurred.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">In some cases, the Company is entitled
to receive royalty payments from licensees. In such cases, the Company recognizes the royalties when they are earned and collectability
of those royalty payments is reasonably assured.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">In connection with its license agreements,
the Company recorded $39,468 and $118,405 in license fee revenue for the three and nine months ended September 30, 2015, respectively,
in its consolidated statements of operations, and recorded $39,467 and $118,404 in license fee revenue for the three and nine
months ended September 30, 2014, respectively. The remainder of the license fees are included in deferred revenue at September
30, 2015 and December 31, 2014, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">   </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Research and Development Costs
</i></b>— Costs incurred in connection with research and development activities are expensed as incurred. Research and development
expenses consist of (i) employee-related expenses, including salaries, benefits, travel and stock compensation expense; (ii) external
research and development expenses incurred under arrangements with third parties, such as contract research organizations, investigational
sites and consultants; (iii) the cost of acquiring, developing and manufacturing clinical study materials; (iv) facilities
and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and laboratory and other
supplies; and (v) costs associated with pre-clinical and clinical activities and regulatory operations.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The Company enters into consulting,
research and other agreements with commercial firms, researchers, universities and others for the provision of goods and services.
Under such agreements, the Company may pay for services on a monthly, quarterly, project or other basis. Such arrangements are
generally cancellable upon reasonable notice and payment of costs incurred. Costs are considered incurred based on an evaluation
of the progress to completion of specific tasks under each contract using information and data provided to us by the Company’s
clinical sites and vendors. These costs consist of direct and indirect costs associated with specific projects, as well as fees
paid to various entities that perform certain research on behalf of the Company. Reimbursements of research expense pursuant to
grants are recorded in the period during which collection of the reimbursement becomes assured, because the reimbursements are
subject to approval.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">In certain circumstances, the Company
is required to make advance payments to vendors for goods or services that will be received in the future for use in research
and development activities. In such circumstances, the advance payments are deferred and are expensed when the activity has been
performed or when the goods have been received.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Stock Compensation</i></b> —
The Company records stock compensation in accordance with ASC 718, <i>Compensation – Stock Compensation </i>(“ASC
718”). ASC 718 requires companies to measure compensation cost for stock employee compensation at fair value at the measurement
date (generally the grant date) and recognize the expense over the employee’s requisite service period. The Company recognizes
in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees
and non-employees.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Income Taxes</i></b> —
Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary
differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.
Deferred tax assets are reduced by a valuation allowance when, based on the weight of available evidence, it is more likely than
not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted
for the effects of the changes in tax laws and rates at the date of enactment.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">When tax returns are filed, it is
highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject
to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit
of a tax position is recognized in the financial statements in the period during which, based on the weight of available evidence,
management believes it is more likely than not that the position will be sustained upon examination, including the resolution
of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions
that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent
likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax
positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits
in the balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">Applicable interest and penalties
associated with unrecognized tax benefits are classified as additional income taxes in the statements of operations.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Net Loss Per Share</i></b> —
Basic net loss per share applicable to common stockholders is calculated by dividing net loss applicable to common stockholders
by the weighted average shares outstanding during the period, without consideration for common stock equivalents. Diluted net
loss per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents
outstanding for the period, determined using the treasury-stock method and the if-converted method. For purposes of the diluted
net loss per share calculation, convertible preferred stock, stock options, unvested restricted stock, and warrants are considered
to be common stock equivalents but have been excluded from the calculation of diluted net loss per share, as their effect would
be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share was the same for all periods presented.
Additionally, dividends associated with the preferred stock, all of which has been extinguished as of September 30, 2015, has
been added back in order to calculate the net loss applicable to common stockholders.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">At September 30, 2015 and 2014, approximately
5,667,750 and 2,735,815 potentially dilutive shares, respectively, were excluded from the shares used to calculate diluted earnings
per share as their inclusion would be anti-dilutive.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Recent Accounting Pronouncements
</i></b>— In May 2014, the FASB issued ASU No. 2014-09, <i>Revenue from Contracts with Customers (</i>Topic 606), which
supersedes all existing revenue recognition requirements, including most industry-specific guidance. The new standard requires
a company to recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration that
the company expects to receive for those goods or services. In August 2015, the FASB issued ASU No. 2015-14, which granted a one-year
deferral of the effective date of ASU No. 2014-09. The new standard will now be effective for the Company on January 1, 2018.
The Company is currently evaluating the potential impact that Topic 606 may have on its financial position and results of operations
and its method of adoption.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">In April 2015, the FASB issued ASU
No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30) –<i>Simplifying the Presentation of Debt Issuance
Costs</i>. The new standard requires that debt issuance costs be presented in the balance sheet as a direct deduction from the
debt liability, consistent with the presentation of a debt discount. The effective date of the new standard is January 1, 2016,
however the Company has elected to implement the new standard beginning in the three months ended September 30, 2015.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">On December 1, 2008, the Company and
CHA Bio & Diostech Co., Ltd. (“CHA”) formed an international joint venture. The new company, Stem Cell & Regenerative
Medicine International, Inc. (“SCRMI”), will work towards developing human blood cells and other clinical therapies
based on the Company’s hemangio-colony forming blast cell program. As of September 30, 2015, the Company holds
a 40% interest in the joint venture and CHA owns a 60% interest. Additionally, SCRMI has paid the Company a fee of $500,000 for
an exclusive, worldwide license to the hemangio-colony forming blast cell program. The Company recorded $7,353 and $22,059
in license fee revenue for the three and nine months ended September 30, 2015, respectively, in its accompanying consolidated
statements of operations, and recorded $7,353 and $22,059 in license fee revenue for the three and nine months ended September
30, 2014, respectively. The balance of unamortized license fee of $300,245 and $322,304 is included in deferred revenue in the
accompanying consolidated balance sheets at September 30, 2015 and December 31, 2014, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 8pt">Property and
equipment consisted of the following at September 30, 2015 and December 31, 2014:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt">September 30,</font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt">December 31,</font></td><td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2015</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2014</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 66%; text-align: left"><font style="font-size: 8pt">Machinery & equipment</font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 13%; text-align: right"><font style="font-size: 8pt">1,380,540</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 13%; text-align: right"><font style="font-size: 8pt">1,186,232</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left"><font style="font-size: 8pt">Computer equipment</font></td><td><font style="font-size: 8pt"> </font></td>
<td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">103,488</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td>
<td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">104,857</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="text-align: left"><font style="font-size: 8pt">Office furniture</font></td><td><font style="font-size: 8pt"> </font></td>
<td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">54,226</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td>
<td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">54,226</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt"><font style="font-size: 8pt">Leasehold improvements</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">620,252</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">620,252</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td>
<td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">2,158,506</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td>
<td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">1,965,567</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td>
<td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td>
<td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="text-align: left; padding-bottom: 1pt"><font style="font-size: 8pt">Accumulated depreciation</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">(1,335,824</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt">)</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">(1,132,604</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font-size: 8pt">Property and equipment, net</font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">822,682</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">832,963</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 8pt">Depreciation
expense for the three and nine months ended September 30, 2015 amounted to $72,766 and $205,590, respectively. Depreciation expense
for the three and nine months ended September 30, 2014 amounted to $45,013 and $109,357, respectively. As of September 30, 2015,
$68,510 of machinery and equipment was related to a capital lease. There were no capital leases as of December 31, 2014.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The accrued settlement is comprised
of the following at September 30, 2015 and December 31, 2014:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt">September 30,</font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt">December 31,</font></td><td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2015</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2014</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 66%; text-align: left"><font style="font-size: 8pt">SEC Civil Action</font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 13%; text-align: right"><font style="font-size: 8pt">           –</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 13%; text-align: right"><font style="font-size: 8pt">1,356,202</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt"><font style="font-size: 8pt">SEC Section 16 Investigation</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">375,000</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="padding-bottom: 2.5pt"><font style="font-size: 8pt">Total</font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">1,731,202</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><u>Securities and Exchange Commission
– Civil Action</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">In May 2012, the Company was named
as a defendant in a civil action brought by the SEC related to transactions involving the sale and issuance of the Company’s
securities. The SEC alleged that Company violated Section 5(a) and 5(c) of the Securities Act of 1933 (the “Securities Act”)
because certain sales of shares to outside organizations, completed in late 2008 and early 2009 under the Company’s former
management, resulted in $3.5 million in proceeds to the Company, were neither registered under the Securities Act nor subject
to an exemption from registration under Section 3(a)(10) of the Securities Act, as amended. In addition, the Company is alleged
to have violated Section 13(a) of the Exchange Act of 1934 because the Company did not disclose the sale and issuance of the shares
to the SEC on a timely basis.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">In December 2013, the Company settled
the civil action. Under the terms of the settlement accepted by the SEC, the Company consented to entry of judgment under which
it neither admits nor denies liability and agreed to the disgorgement of $3.5 million in proceeds from the transactions in question.
In addition, the Company will pay approximately $587,000 in pre-judgment interest. The total amount due, approximately $4.1 million,
was paid over six equal quarterly installments. In addition, the settlement permanently restrains and enjoins the Company from
violations of Sections 5(a) and 5(c) of the Securities Act, Section 13(a) of the Exchange Act and Rule 13a-11 under the Exchange
Act. As of September 30, 2015, the Company has paid in full its obligation to the SEC.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><u>Securities and Exchange Commission
– Section 16 Investigation</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">In April 2013, it was determined that
Gary Rabin, the Company’s former Chief Executive Officer, failed to report 27 transactions in a timely manner on Form 4
under Section 16 of the Exchange Act in which Mr. Rabin sold shares of the Company’s common stock that took place between
February 7, 2011 and January 10, 2013. The SEC then investigated the unreported transactions involving sales of shares of the
Company’s common stock. In September 2014, the Company settled the SEC action arising from the SEC’s investigation.
Under the terms of the settlement accepted by the SEC, the Company consented to the entry of order under which it neither admits
nor denies liability and has agreed to pay a civil penalty of $375,000, which has been previously accrued for, by July 2015. In
addition, the settlement requires the Company to engage an independent Section 16 compliance consultant, provide Section 16(a)
training to each Section 16(a) reporting person, and provide a certification of compliance that each of the preceding requirements
were completed. The settlement also requires the Company to cease and desist from committing or causing any violations and any
future violations of Section 17(a)(2) of the Securities Act, Sections 13(a) and 14(a) of the Exchange Act, and Rules 12b-20, 13a-1,
and 14a-9 thereunder. The terms of this settlement require the Company to allocate financial and management resources to complying
with the settlement’s terms, which may have adverse effect on our business. Also, if the SEC deems the Company to not have
complied with any portion of the settlement, it may issue additional fines or sanctions against us which may limit our ability
to issue securities or otherwise conduct our business as currently conducted. As of September 30, 2015 the Company has paid in
full its obligation to the SEC.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><i>CAMOFI Senior Secured Convertible
Debentures </i></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">On January 11, 2013, the Company entered
into a settlement agreement and mutual release (“the Settlement Agreement”) with CAMOFI Master LDC (“CAMOFI”)
and CAMHZN Master LDC (“CAMHZN” and together with CAMOFI, the “CAMOFI Parties”), relating to the lawsuit
between the CAMOFI Parties, as plaintiffs, and the Company, as defendant, in the Supreme Court of New York. Pursuant to the Settlement
Agreement, the Company issued Debentures in the principal amount of $4,732,781 and $1,267,219 to CAMOFI and CAMHZN, respectively
(together the “Debentures”).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The Debentures had contained an embedded
beneficial conversion feature as the Debentures are convertible at a price per share of common stock equal to 80% of VWAP of the
ten consecutive trading days prior to the conversion date. The embedded beneficial conversion feature was modeled using a binomial
lattice model, and had a calculated value at September 30, 2014 of $0. The Company recorded a gain of $663,000 for the change
in the fair value of the embedded conversion option liability for the nine months ended September 30, 2014 in connection with
the retirement of the remaining debentures.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The Company recorded a debt discount
of $725,000, which was being amortized over the life of the Debentures using the effective interest rate of 22.9%. The unamortized
discount balance of $108,229 was written off to interest expense with the retirement of the remaining outstanding Debentures.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> <b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">On May 2, 2014, the Company paid to
the CAMOFI Parties an aggregate amount of approximately $1,616,000 calculated in accordance with the payment acceleration provisions
of the Debentures and satisfying the Company’s obligations under the Debentures. The payment represented the remaining $1,200,000
in principal amount due and an additional amount of approximately $416,000, which represented penalties, interest and legal cost
reimbursement to the CAMOFI Parties. With the payment, the Company satisfied in full its obligations under the Debentures and
the terms of the Settlement Agreement and Mutual Release dated as of December 31, 2012 pursuant to which the Debentures were issued
in January 2013. The Company received correspondence from the CAMOFI Parties stating that the CAMOFI Parties believe the aggregate
amount due to be different than the amount the Company paid. The Company believes that its interpretation of the Debentures is
accurate and complete and its liability under the Debentures is zero as of September 30, 2015.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Warrant Activity</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">A summary of warrant activity for
the nine months ended September 30, 2015 is presented below:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="width: 34%; text-align: right"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 12%; border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Number of
Warrants</font></td>
<td style="width: 1%; text-align: center"><font style="font-size: 8pt"> </font></td>
<td style="width: 12%; border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Number of
Common Shares Underlying Warrants</font></td>
<td style="width: 1%; text-align: center"><font style="font-size: 8pt"> </font></td>
<td style="width: 12%; border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Weighted
Average Exercise Price $</font></td>
<td style="width: 1%; text-align: center"><font style="font-size: 8pt"> </font></td>
<td style="width: 12%; border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Weighted
Average Remaining Contractual Life (in years)</font></td>
<td style="width: 1%; text-align: center"><font style="font-size: 8pt"> </font></td>
<td style="width: 12%; border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Aggregate
Intrinsic Value (000)$</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font: 8pt Times New Roman, Times, Serif">Outstanding, December 31, 2014</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">45,906</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">45,906</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">40.46</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1.45</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Granted </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">5,985,000</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,992,500</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7.48</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font: 8pt Times New Roman, Times, Serif">Outstanding, September 30, 2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">6,030,906</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3,038,406</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7.98</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">5.16</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Exercisable, September 30, 2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">45,906</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">45,906</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">40.46</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.71</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The aggregate intrinsic value in the
table above is before applicable income taxes and is calculated based on the difference between the exercise price of the warrants
and the quoted price of the Company’s common stock as of the reporting date.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">On June 16, 2015, the Company
entered into an underwriting agreement (the “Underwriting Agreement”) related to a registered direct offering (the
“Offering”) of an aggregate of 5,500,000 shares of common stock, par value $0.001 per share (the “Shares”),
together with accompanying warrants to purchase an aggregate of 2,750,000 shares of common stock (the “Warrants”).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The Shares and Warrants were sold
in combination, with one Warrant to purchase one half of one share of common stock, for each Share sold. The combined sale price
to the public for each Share and accompanying Warrant was $5.50. The per share proceeds received by the Company from the underwriters,
after accounting for the standard 6% underwriting fee, for the Shares and accompanying Warrants was $5.17. The Offering closed
on June 22, 2015 and the aggregate net proceeds from the sale of the Shares and accompanying Warrants, excluding the potential
future proceeds, if any, from the exercise of the Warrants issued in the offering, was approximately $28.2 million after deducting
the underwriting discount of $1,815,000 and estimated offering expenses payable by the Company of approximately $170,000.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The Warrants may be exercised at any
time after December 22, 2015 until December 22, 2020. The initial exercise price for the Warrants will be $7.48 subject
to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or
similar events affecting the Company’s common stock. The Warrants are classified as a liability on the balance sheet as
of September 30, 2015 due to the fact that at inception, the Warrants embody an obligation to repurchase the Warrants in the event
of a change in control whereby the surviving entity is not listed on a public exchange. Because of this potential settlement,
regardless of probability, and the fact that the choice of cash settlement may ultimately lie with the warrant holders, triggers
liability classification for the warrants under ASC 480. At inception, the fair value of the warrants was $10,237,968.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">In addition, the Underwriting Agreement
provided the underwriters a 30-day option to purchase up to an additional 825,000 shares and/or warrants to purchase an additional
412,500 shares of common stock from the Company (of which 485,000 Warrants representing 242,500 shares of common stock were purchased
immediately in connection with the Offering’s closing on June 22, 2015).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">On September 19, 2012 the Company
entered into a purchase agreement with Lincoln Park Capital, LLC (“Lincoln Park”). Pursuant to the purchase agreement,
the Company had the right to sell to Lincoln Park up to $35,000,000 in shares of its common stock. On June 18, 2014, the Company
completed the last sale of common stock to Lincoln Park under this agreement.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">On June 27, 2014, the Company entered
into a similar purchase agreement, the “2014 Purchase Agreement,” with Lincoln Park pursuant to which the Company
has the right to sell to Lincoln Park up to $30,000,000 in shares of its common stock, subject to certain limitations set forth
in the purchase agreement.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">During the nine months ended September
30, 2015, Lincoln Park purchased 2,022,996 shares of common stock pursuant to the 2014 Purchase Agreement for cash proceeds of
$12,797,047.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">During the nine months ended September
30, 2015, the Company issued various board members 33,750 shares of common stock valued at $166,166 as compensation for board
services.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">At the annual meeting of the Company’s
stockholders held in November 2014, the Company’s stockholders approved a Certificate of Amendment to the Company’s
Certificate of Incorporation. The Certificate of Amendment provided for an increase in the number of authorized shares of the
Company’s common stock, par value $0.001 per share, from 37,500,000 to 60,000,000. The Certificate of Amendment became effective
upon its filing with the Secretary of State of the State of Delaware on November 12, 2014.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">On June 16, 2015, the Company
entered into the Underwriting Agreement related to the Offering. See Note 8, “Warrant Summary,” for additional information
about the Offering.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">A summary of stock plans as of September
30, 2015 is presented below:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Stock Plans</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Options/Shares</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Options/Shares</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Options</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Available</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Total </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Stock
Plan</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Issued</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Outstanding</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">For
Grant</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Authorized</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 36%"><font style="font: 8pt Times New Roman, Times, Serif">2005 Stock Incentive Plan</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,756,356</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,107,342</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3,243,046</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">5,818,388</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">2014 Stock Option and Incentive Plan</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">210,000</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">175,000</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3,790,000</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4,000,000</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,966,356</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,282,342</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7,033,046</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">9,818,388</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">At the annual meeting of the Company’s
stockholders held in July 2015, the Company’s stockholders approved the First Amendment to the Company’s 2014 Stock
Option and Incentive Plan (the “<u>Plan Amendment</u>”) to, among other things, increase the number of shares of common
stock available for issuance thereunder by 3,750,000 shares to a total of 4,000,000 shares. The Plan Amendment previously had
been approved, subject to stockholder approval, by the Company’s Board of Directors.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Stock Option Activity</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">A summary of option activity for the
nine months ended September 30, 2015 is presented below:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Weighted</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Weighted</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Average</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Average</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Remaining</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Aggregate</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Number of</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Exercise</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Contractual</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Intrinsic</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Options</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Price</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Life
(in years)</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Value</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 36%"><font style="font: 8pt Times New Roman, Times, Serif">Outstanding, December 31, 2014</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,245,381</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">12.03</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">8.12</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">12,110</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Granted</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">100,000</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">6.29</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font: 8pt Times New Roman, Times, Serif">Forfeited/canceled</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(63,039</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">)</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">28.59</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Outstanding, September 30, 2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,282,342</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">11.33</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7.47</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Vested and expected to vest at September 30, 2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,187,959</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">11.49</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7.41</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Exercisable, September 30, 2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,556,318</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">13.11</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">6.82</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The aggregate intrinsic value in the
table above is before applicable income taxes and is calculated based on the difference between the exercise price of the options
and the quoted price of the Company’s common stock as of the reporting date.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The assumptions used in calculating
the fair value of options granted using the Black-Scholes option pricing model for options granted during the nine months ended,
are as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="width: 68%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 15%; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">September 30,</font></td>
<td nowrap="nowrap" style="width: 1%; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 15%; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">September 30,</font></td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">2015</font></td>
<td nowrap="nowrap" style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">2014</font></td></tr>
<tr style="background-color: rgb(238,238,238)">
<td nowrap="nowrap" style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Risk-free interest rate </font></td>
<td nowrap="nowrap" style="vertical-align: bottom"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">1.59 –
2.07%</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">.02 –
2.29%</font></td></tr>
<tr style="background-color: White">
<td nowrap="nowrap" style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Expected life of the options
</font></td>
<td nowrap="nowrap" style="vertical-align: bottom"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">5.00 -
6.25 years</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">5.00 -
6.25 years</font></td></tr>
<tr style="background-color: rgb(238,238,238)">
<td nowrap="nowrap" style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Expected volatility </font></td>
<td nowrap="nowrap" style="vertical-align: bottom"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">93 - 124%</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">112 -
148%</font></td></tr>
<tr style="background-color: White">
<td nowrap="nowrap" style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Expected dividend yield </font></td>
<td nowrap="nowrap" style="vertical-align: bottom"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">0%</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">0%</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 8pt">The weighted
average grant-date fair value for the options granted during the nine months ended September 30, 2015 and 2014 was $5.08 and $7.50,
respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 8pt">The unrecognized
compensation expense related to the unvested options as of September 30, 2015, was $4,980,700 which will be recognized over the
weighted average vesting period of 2.09 years.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Restricted Stock Unit Activity</i></b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"><b> </b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">A summary of the restricted stock
unit activity for the nine months ended September 30, 2015:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Number
of</font><font style="font-size: 8pt"><br />
<font style="font-family: Times New Roman, Times, Serif">Shares</font><br />
<font style="font-family: Times New Roman, Times, Serif">Underlying Restricted </font><br />
<font style="font-family: Times New Roman, Times, Serif">Units</font></font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Weighted</font><font style="font-size: 8pt"><br />
<font style="font-family: Times New Roman, Times, Serif">Average</font><br />
<font style="font-family: Times New Roman, Times, Serif">Grant-Date </font><br />
<font style="font-family: Times New Roman, Times, Serif">Fair Value </font><br />
<font style="font-family: Times New Roman, Times, Serif">per Share</font></font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Weighted
</font><font style="font-size: 8pt"><br />
<font style="font-family: Times New Roman, Times, Serif">Average</font><br />
<font style="font-family: Times New Roman, Times, Serif">Remaining</font><br />
<font style="font-family: Times New Roman, Times, Serif">Recognition</font><br />
<font style="font-family: Times New Roman, Times, Serif">Period</font><br />
<font style="font-family: Times New Roman, Times, Serif">(in years)</font></font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 52%"><font style="font: 8pt Times New Roman, Times, Serif">Outstanding, December 31, 2014</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">493,000</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">    7.28</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2.60</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Granted</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,000</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">6.62</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font: 8pt Times New Roman, Times, Serif">Vested</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(155,998</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">)</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7.25</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Outstanding, September 30, 2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">347,002</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7.16</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1.93</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Unearned stock-based compensation expense of outstanding restricted
units</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,305,357</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 8pt">Stock compensation
expense to employees and non-employees for the three and nine months ended September 30, 2015 and 2014 are as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Three Months Ended</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">September 30,</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">September 30,</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">2014</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 68%"><font style="font: 8pt Times New Roman, Times, Serif">Research and development</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">546,688</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">178,004</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">General and administrative</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">980,122</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">348,405</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,526,810</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">526,409</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Nine Months Ended</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">September 30,</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">September 30,</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">2014</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 68%"><font style="font: 8pt Times New Roman, Times, Serif">Research and development</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,639,181</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">353,333</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">General and administrative</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,889,056</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">881,836</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4,528,237</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,235,169</font></td>
<td><font style="font-size: 8pt"> </font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Basis of Presentation</i></b>
— The Company follows accounting standards set by the Financial Accounting Standards Board (“FASB”). The accompanying
consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America, GAAP. References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codification™,
sometimes referred to as the Codification or “ASC.” Although the Company believes that the disclosures in these financial
statements are adequate to make the information presented not misleading, certain information normally included in the footnotes
prepared in accordance with GAAP has been omitted as permitted by the rules and regulations of the Securities and Exchange Commission
(“SEC”).  The accompanying financial statements should be read in conjunction with the audited financial statements
and notes thereto included in the Company’s Annual Report on Form 10−K for the fiscal year ended December 31, 2014
filed with the SEC on March 16, 2015.  The results for the three and nine month periods ended September 30, 2015 are not
necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2015, or any future period.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The accompanying consolidated financial
statements have been prepared in conformity with GAAP which contemplate continuation of the Company as a going concern. Management’s
plans to continue as a going concern contemplate raising additional capital including the debt financing completed in the third
quarter of 2015 that resulted in approximately $6.0 million in net proceeds, the execution of an underwritten secondary offering
completed in the second quarter of 2015 that resulted in approximately $28.4 million in net proceeds, and the prior execution
of an agreement for a $30 million equity line in June 2014, of which approximately $5.8 million remains available as of September
30, 2015. The Company believes that its current cash balance, and the approximately $5.8 million available under the Lincoln Park
financing arrangement as of September 30, 2015, will be sufficient to fund operations into the second half of 2016. The Company,
as part of the debt financing completed in the third quarter of 2015, has the option, subject to the terms and conditions of the
Loan and Security Agreement described in Note 7, to exercise an additional term loan totaling $4.0 million. There can be no assurances
that management can raise the necessary additional capital on favorable terms or at all. The accompanying financial statements
do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Principles of Consolidation
</i></b>— The accounts of the Company and its wholly-owned subsidiary Mytogen, Inc. are included in the accompanying
consolidated financial statements. All intercompany balances and transactions were eliminated in consolidation.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Segment Reporting </i></b>—
ASC 280, <i>Segment Reporting</i> requires use of the “management approach” model for segment reporting. The management
approach model is based on the way a company’s management organizes segments within the company for making operating decisions
and assessing performance. The Company determined it has one operating segment.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Use of Estimates</i></b> —
These consolidated financial statements have been prepared in accordance with GAAP and, accordingly, require management to make
estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. In addition, management has estimated variables used
to calculate the Black-Scholes option pricing model used to value derivative instruments, including outstanding warrants. Also,
management has estimated the expected economic life and value of the Company’s licensed technology, the Company’s
net operating loss for tax purposes, share-based payments for compensation to employees, directors, consultants and investment
banks, and the useful lives of the Company’s fixed assets. Actual results could differ from those estimates.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Cash and Cash Equivalents</i></b>
— Cash equivalents are comprised of certain highly liquid investments with maturities of three months or less when purchased.
The Company maintains its cash in bank deposit accounts, which at times, may exceed federally insured limits. The Company has
not experienced any losses related to this concentration of risk. As of September 30, 2015 and December 31, 2014, the Company
had deposits in excess of federally-insured limits totaling $31,887,435 and $4,325,886, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Commitments and Contingencies
</i></b>— The Company recognizes liabilities for contingencies and commitments when a loss is probable and can be reasonably
estimated.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">Relating to loss contingencies the
Company accrues the best estimate of a loss within a range. If no estimate in a range is better than any other, the minimum amount
is accrued. The Company discloses a reasonably possible loss in excess of the amount accrued, if applicable. For reasonably possible
loss contingencies, the Company discloses the nature of the loss contingency and provides a range of the estimate of possible
loss or state that an estimate cannot be made.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">Included in the other liabilities
balance as of December 31, 2014 is approximately $1,200,000, primarily related to the acquisition of Mytogen which the Company
did not expect to settle during 2015. This balance was reclassified to the accounts payable balance as of September 30, 2015 as
the Company expects to settle these payables in the near-term.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Grants Receivable</i></b> —
The Company periodically assesses its grants receivable for collectability on a specific identification basis. If collectability
of an account becomes unlikely, the Company records an allowance for that doubtful account. Once the Company has exhausted efforts
to collect, management writes off the grants receivable against the allowance it has already created.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Property and Equipment</i></b>
— The Company records its property and equipment at historical cost. The Company expenses maintenance and repairs as incurred.
Upon disposition of property and equipment, the gross cost and accumulated depreciation are written off and the difference between
the proceeds and the net book value is recorded as a gain or loss on sale of assets. In the case of certain assets acquired under
capital leases, the assets are recorded net of imputed interest, based upon the net present value of future payments. Assets under
capital lease are pledged as collateral for the related lease.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The Company provides for depreciation
over the assets’ estimated useful lives as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="width: 30%"><font style="font: 8pt Times New Roman, Times, Serif">Machinery & equipment</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 69%"><font style="font: 8pt Times New Roman, Times, Serif">4 years</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Computer equipment</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">3 years</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Office furniture</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">4 years</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Leasehold improvements</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">Lesser of remaining lease life or economic life</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Capital leases</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">Lesser of lease life or economic life</font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Patents</i></b> — The
Company follows ASC 350-30, <i>General Intangibles Other than Goodwill </i>(“ASC 350-30”), in accounting for its patents.
ASC 350-30 provides that costs of internally developing, maintaining, or restoring intangible assets that are not specifically
identifiable, that have indeterminate lives, or that are inherent in a continuing business and related to an entity as a whole,
shall be recognized as an expense when incurred. The Company has expensed as research and development expense all costs associated
with developing its patents.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Equity Method Investment</i></b>
— The Company follows ASC 323, <i>Investments-Equity Method and Joint Ventures, </i>in accounting for its investment in
the joint venture. In the event the Company’s share of the joint venture’s net losses reduces the Company’s
investment to zero, the Company will discontinue applying the equity method and will not provide for additional losses unless
the Company has guaranteed obligations of the joint venture or is otherwise committed to provide further financial support for
the joint venture. If the joint venture subsequently reports net income, the Company will resume applying the equity method only
after its share of that net income equals the share of net losses not recognized during the period the equity method was suspended.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Long-Lived Assets</i></b>—
The Company follows ASC 360-10, <i>Property, Plant, and Equipment, </i>which established a “primary asset” approach
to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for
a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset
is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition
of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.
For the nine months ended September 30, 2015, the Company had not experienced impairment losses on its long-lived assets.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Fair Value Measurements</i>
—</b> The Company applies the provisions of ASC 820-10, <i>Fair Value Measurements and Disclosures </i>(“ASC 820-10”)<i>.
</i>ASC 820-10 defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement
that enhances disclosure requirements for fair value measures. For certain financial instruments, including cash and cash equivalents,
grants receivable, prepaid expenses, accounts payable and accrued expenses, the carrying amounts approximate fair value due to
their relatively short maturities. The carrying amount of senior secured convertible debentures approximated fair value as the
interest rate charged on the debentures was based on the prevailing rate. The three levels of valuation hierarchy are defined
as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 24px"><font style="font-size: 8pt"> </font></td>
<td style="width: 24px"><font style="font: 8pt Symbol">·</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">Level 1 inputs to the valuation methodology are quoted prices for
identical assets or liabilities in active markets.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 24px"><font style="font-size: 8pt"> </font></td>
<td style="width: 24px"><font style="font: 8pt Symbol">·</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">Level 2 inputs to the valuation methodology include quoted prices
for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly
or indirectly, for substantially the full term of the financial instrument.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 24px"><font style="font-size: 8pt"> </font></td>
<td style="width: 24px"><font style="font: 8pt Symbol">·</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">Level 3 inputs to the valuation methodology are unobservable and
significant to the fair value measurement.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The Company analyzes all financial
instruments with features of both liabilities and equity under ASC 480, <i>Distinguishing Liabilities from Equity, </i>and ASC
815, <i>Derivatives and Hedging.</i> Derivative liabilities are adjusted to reflect fair value at each period end, with any increase
or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives. The effects
of interactions between embedded derivatives are calculated and accounted for in arriving at the overall fair value of the financial
instruments. In addition, the fair values of freestanding derivative instruments such as warrant derivatives are valued using
the Black-Scholes model.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The Company uses Level 3 inputs for
its valuation methodology for the fair value of certain embedded conversion options and other warrant derivative liabilities.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 24px"><font style="font-size: 8pt"> </font></td>
<td style="width: 24px"><font style="font: 8pt Symbol">·</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">The expected volatility of the Company’s common stock is estimated
from the historical volatility of daily returns in the Company’s common stock price. The Company monitors the volatility
of its common stock on a quarterly basis to observe trends that may impact the fair value of the notes.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 24px"><font style="font-size: 8pt"> </font></td>
<td style="width: 24px"><font style="font: 8pt Symbol">·</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">The discount for illiquidity is measured using an average-strike
option that calculates the discount as the opportunity cost for not being able to sell a large block of the Company’s
common stock immediately at prevailing observable market prices. Inputs to the average-strike option model include the expected
volatility of the Company’s common stock and time to sell a large block of the Company’s stock as Level 3 inputs
and other observable inputs. The time to sell the stock is estimated considering the historical daily trading volume of our
common stock and market maker estimates of the amount of shares that can be offered for sale above the daily trading volume
without depressing the price of the Company’s common stock.</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">At September 30, 2015, the Company
identified the following assets and liabilities that are required to be presented on the balance sheet at fair value:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Description</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Fair
Value </font><font style="font-size: 8pt"><br />
<font style="font-family: Times New Roman, Times, Serif">As of</font><br />
<font style="font-family: Times New Roman, Times, Serif">September 30, 2015</font></font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="10" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Fair
Value Measurements at</font><font style="font-size: 8pt"><br />
<font style="font-family: Times New Roman, Times, Serif">September 30, 2015</font><br />
<font style="font-family: Times New Roman, Times, Serif">Using Fair Value Hierarchy</font></font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 37%"><font style="font: 8pt Times New Roman, Times, Serif">Warrant liabilities</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$ </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; width: 13%"><font style="font: 8pt Times New Roman, Times, Serif">7,843,106</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; width: 13%"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; width: 13%"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; width: 13%"><font style="font: 8pt Times New Roman, Times, Serif">7,843,106</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Total</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7,843,106</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">      <font style="font-family: Times New Roman, Times, Serif">–</font></font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">      <font style="font-family: Times New Roman, Times, Serif">–</font></font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7,843,106</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The following tables reconcile the
change in fair value for measurements categorized within Level 3 of the fair value hierarchy:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Warrant
Liabilities</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 84%"><font style="font: 8pt Times New Roman, Times, Serif">Balance at December 31, 2014</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">16,255</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Addition of warrant liability</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">11,140,771</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font: 8pt Times New Roman, Times, Serif">Total change in fair value for the period included in earnings</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(3,313,920)</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Balance at September 30, 2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7,843,106</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Warrant
Overallotment Liabilities</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 84%"><font style="font: 8pt Times New Roman, Times, Serif">Balance at December 31, 2014</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Addition of warrant overallotment liability</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">628,767</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font: 8pt Times New Roman, Times, Serif">Total change in fair value for the period included in earnings</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(628,767)</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Balance at September 30, 2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">Gains included in earnings for the
nine months ended September 30, 2015 are reported as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Adjustments
to fair value of derivatives</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 84%"><font style="font: 8pt Times New Roman, Times, Serif">Total gain included in earnings</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; width: 13%"><font style="font: 8pt Times New Roman, Times, Serif">3,313,920</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The following table provides quantitative
information about measurements categorized within Level 3 of the fair value hierarchy:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="width: 28%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 13%; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Fair Value at</font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 14%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 28%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 13%"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">September 30,</font></td>
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Valuation</font></td>
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Description</font></td>
<td nowrap="nowrap" style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">2015</font></td>
<td nowrap="nowrap" style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Technique</font></td>
<td nowrap="nowrap" style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Unobservable
Input</font></td>
<td nowrap="nowrap" style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Value</font></td></tr>
<tr style="background-color: rgb(238,238,238)">
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Warrant derivative liabilities</font></td>
<td nowrap="nowrap" style="vertical-align: bottom"><font style="font-size: 8pt"> </font></td>
<td style="vertical-align: top; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">$7,843,106 </font></td>
<td nowrap="nowrap" style="vertical-align: bottom"><font style="font-size: 8pt"> </font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">Black Scholes Model</font></td>
<td nowrap="nowrap" style="vertical-align: bottom"><font style="font-size: 8pt"> </font></td>
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Expected volatility of the Company's
common stock</font></td>
<td nowrap="nowrap" style="vertical-align: bottom"><font style="font-size: 8pt"> </font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">69% - 92%</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">For the three and nine months ended
September 30, 2015, the Company recognized gains of $3,598,946 and $3,942,687, respectively, for the changes in the valuation
of derivative liabilities. For the three and nine months ended September 30, 2014, the Company recognized gains of $42,207 and
$719,007, respectively, for the changes in the valuation of derivative liabilities.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The Company did not identify any non-recurring
assets and liabilities that were recorded at fair value during the periods presented.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Revenue Recognition</i></b>
<b><i>and Deferred Revenue</i> —</b> The Company’s revenues are primarily generated from license and research agreements
with collaborators. Licensing revenue is recognized on a straight-line basis over the shorter of the life of the license or the
estimated economic life of the patents related to the license.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">License fee revenue begins to be recognized
in the first full month following the effective date of the license agreement. Deferred revenue represents the portion of the
license and other payments received that has not been earned. Costs associated with license revenue are deferred and recognized
over the same term as the revenue. Revenue pursuant to grants are recorded in the period during which expenses are incurred.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">In some cases, the Company is entitled
to receive royalty payments from licensees. In such cases, the Company recognizes the royalties when they are earned and collectability
of those royalty payments is reasonably assured.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">In connection with its license agreements,
the Company recorded $39,468 and $118,405 in license fee revenue for the three and nine months ended September 30, 2015, respectively,
in its consolidated statements of operations, and recorded $39,467 and $118,404 in license fee revenue for the three and nine
months ended September 30, 2014, respectively. The remainder of the license fees are included in deferred revenue at September
30, 2015 and December 31, 2014, respectively.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Research and Development Costs
</i></b>— Costs incurred in connection with research and development activities are expensed as incurred. Research and development
expenses consist of (i) employee-related expenses, including salaries, benefits, travel and stock compensation expense; (ii) external
research and development expenses incurred under arrangements with third parties, such as contract research organizations, investigational
sites and consultants; (iii) the cost of acquiring, developing and manufacturing clinical study materials; (iv) facilities
and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and laboratory and other
supplies; and (v) costs associated with pre-clinical and clinical activities and regulatory operations.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The Company enters into consulting,
research and other agreements with commercial firms, researchers, universities and others for the provision of goods and services.
Under such agreements, the Company may pay for services on a monthly, quarterly, project or other basis. Such arrangements are
generally cancellable upon reasonable notice and payment of costs incurred. Costs are considered incurred based on an evaluation
of the progress to completion of specific tasks under each contract using information and data provided to us by the Company’s
clinical sites and vendors. These costs consist of direct and indirect costs associated with specific projects, as well as fees
paid to various entities that perform certain research on behalf of the Company. Reimbursements of research expense pursuant to
grants are recorded in the period during which collection of the reimbursement becomes assured, because the reimbursements are
subject to approval.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">In certain circumstances, the Company
is required to make advance payments to vendors for goods or services that will be received in the future for use in research
and development activities. In such circumstances, the advance payments are deferred and are expensed when the activity has been
performed or when the goods have been received.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Stock Compensation</i></b> —
The Company records stock compensation in accordance with ASC 718, <i>Compensation – Stock Compensation </i>(“ASC
718”). ASC 718 requires companies to measure compensation cost for stock employee compensation at fair value at the measurement
date (generally the grant date) and recognize the expense over the employee’s requisite service period. The Company recognizes
in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees
and non-employees.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Income Taxes</i></b> —
Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary
differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.
Deferred tax assets are reduced by a valuation allowance when, based on the weight of available evidence, it is more likely than
not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted
for the effects of the changes in tax laws and rates at the date of enactment.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">When tax returns are filed, it is
highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject
to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit
of a tax position is recognized in the financial statements in the period during which, based on the weight of available evidence,
management believes it is more likely than not that the position will be sustained upon examination, including the resolution
of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions
that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent
likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax
positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits
in the balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">Applicable interest and penalties
associated with unrecognized tax benefits are classified as additional income taxes in the statements of operations.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Net Loss Per Share</i></b> —
Basic net loss per share applicable to common stockholders is calculated by dividing net loss applicable to common stockholders
by the weighted average shares outstanding during the period, without consideration for common stock equivalents. Diluted net
loss per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents
outstanding for the period, determined using the treasury-stock method and the if-converted method. For purposes of the diluted
net loss per share calculation, convertible preferred stock, stock options, unvested restricted stock, and warrants are considered
to be common stock equivalents but have been excluded from the calculation of diluted net loss per share, as their effect would
be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share was the same for all periods presented.
Additionally, dividends associated with the preferred stock, all of which has been extinguished as of September 30, 2015, has
been added back in order to calculate the net loss applicable to common stockholders.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">At September 30, 2015 and 2014, approximately
5,667,750 and 2,735,815 potentially dilutive shares, respectively, were excluded from the shares used to calculate diluted earnings
per share as their inclusion would be anti-dilutive.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"><b><i>Recent Accounting Pronouncements
</i></b>— In May 2014, the FASB issued ASU No. 2014-09, <i>Revenue from Contracts with Customers (</i>Topic 606), which
supersedes all existing revenue recognition requirements, including most industry-specific guidance. The new standard requires
a company to recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration that
the company expects to receive for those goods or services. In August 2015, the FASB issued ASU No. 2015-14, which granted a one-year
deferral of the effective date of ASU No. 2014-09. The new standard will now be effective for the Company on January 1, 2018.
The Company is currently evaluating the potential impact that Topic 606 may have on its financial position and results of operations
and its method of adoption.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">In April 2015, the FASB issued ASU
No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30) –<i>Simplifying the Presentation of Debt Issuance
Costs</i>. The new standard requires that debt issuance costs be presented in the balance sheet as a direct deduction from the
debt liability, consistent with the presentation of a debt discount. The effective date of the new standard is January 1, 2016,
however the Company has elected to implement the new standard beginning in the three months ended September 30, 2015.</font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"><tr style="vertical-align: bottom"><td style="width: 30%"><font style="font: 8pt Times New Roman, Times, Serif">Machinery & equipment</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 69%"><font style="font: 8pt Times New Roman, Times, Serif">4 years</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Computer equipment</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">3 years</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Office furniture</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">4 years</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Leasehold improvements</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">Lesser of remaining lease life or economic life</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Capital leases</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">Lesser of lease life or economic life</font></td></tr></table>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"><tr style="vertical-align: bottom"><td style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Description</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Fair
Value </font><font style="font-size: 8pt"><br />
<font style="font-family: Times New Roman, Times, Serif">As of</font><br />
<font style="font-family: Times New Roman, Times, Serif">September 30, 2015</font></font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="10" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Fair
Value Measurements at</font><font style="font-size: 8pt"><br />
<font style="font-family: Times New Roman, Times, Serif">September 30, 2015</font><br />
<font style="font-family: Times New Roman, Times, Serif">Using Fair Value Hierarchy</font></font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 37%"><font style="font: 8pt Times New Roman, Times, Serif">Warrant liabilities</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$ </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; width: 13%"><font style="font: 8pt Times New Roman, Times, Serif">7,843,106</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; width: 13%"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; width: 13%"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right; width: 13%"><font style="font: 8pt Times New Roman, Times, Serif">7,843,106</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Total</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7,843,106</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">      <font style="font-family: Times New Roman, Times, Serif">–</font></font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">      <font style="font-family: Times New Roman, Times, Serif">–</font></font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7,843,106</font></td>
<td><font style="font-size: 8pt"> </font></td></tr></table>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"><tr style="vertical-align: bottom"><td nowrap="nowrap" style="width: 28%"><font style="font-size: 8pt"></font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 13%; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Fair Value at</font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 14%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 28%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 13%"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">September 30,</font></td>
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Valuation</font></td>
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="background-color: white; text-align: center"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Description</font></td>
<td nowrap="nowrap" style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">2015</font></td>
<td nowrap="nowrap" style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Technique</font></td>
<td nowrap="nowrap" style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Unobservable
Input</font></td>
<td nowrap="nowrap" style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Value</font></td></tr>
<tr style="background-color: rgb(238,238,238)">
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Warrant derivative liabilities</font></td>
<td nowrap="nowrap" style="vertical-align: bottom"><font style="font-size: 8pt"> </font></td>
<td style="vertical-align: top; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">$7,843,106 </font></td>
<td nowrap="nowrap" style="vertical-align: bottom"><font style="font-size: 8pt"> </font></td>
<td style="vertical-align: bottom"><font style="font: 8pt Times New Roman, Times, Serif">Black Scholes Model</font></td>
<td nowrap="nowrap" style="vertical-align: bottom"><font style="font-size: 8pt"> </font></td>
<td style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Expected volatility of the Company's
common stock</font></td>
<td nowrap="nowrap" style="vertical-align: bottom"><font style="font-size: 8pt"> </font></td>
<td style="vertical-align: top; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">69% - 92%</font></td></tr></table>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"><tr style="vertical-align: bottom"><td></td><td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt">September 30,</font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt">December 31,</font></td><td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2015</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2014</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 66%; text-align: left"><font style="font-size: 8pt">Machinery & equipment</font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 13%; text-align: right"><font style="font-size: 8pt">1,380,540</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 13%; text-align: right"><font style="font-size: 8pt">1,186,232</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left"><font style="font-size: 8pt">Computer equipment</font></td><td><font style="font-size: 8pt"> </font></td>
<td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">103,488</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td>
<td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">104,857</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="text-align: left"><font style="font-size: 8pt">Office furniture</font></td><td><font style="font-size: 8pt"> </font></td>
<td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">54,226</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td>
<td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">54,226</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt"><font style="font-size: 8pt">Leasehold improvements</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">620,252</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">620,252</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td>
<td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">2,158,506</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td>
<td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt">1,965,567</font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td>
<td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td>
<td style="text-align: left"><font style="font-size: 8pt"> </font></td><td style="text-align: right"><font style="font-size: 8pt"> </font></td><td style="text-align: left"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="text-align: left; padding-bottom: 1pt"><font style="font-size: 8pt">Accumulated depreciation</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">(1,335,824</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt">)</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">(1,132,604</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 2.5pt"><font style="font-size: 8pt">Property and equipment, net</font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">822,682</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">832,963</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr></table>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"><tr style="vertical-align: bottom"><td><font style="font-size: 8pt"></font></td><td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt">September 30,</font></td><td><font style="font-size: 8pt"> </font></td><td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt">December 31,</font></td><td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2015</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 8pt">2014</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 66%; text-align: left"><font style="font-size: 8pt">SEC Civil Action</font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 13%; text-align: right"><font style="font-size: 8pt">           –</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td><td style="width: 2%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%; text-align: left"><font style="font-size: 8pt">$</font></td><td style="width: 13%; text-align: right"><font style="font-size: 8pt">1,356,202</font></td><td style="width: 1%; text-align: left"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt"><font style="font-size: 8pt">SEC Section 16 Investigation</font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 1pt"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: Black 1pt solid; text-align: left"><font style="font-size: 8pt"> </font></td><td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-size: 8pt">375,000</font></td><td style="padding-bottom: 1pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="padding-bottom: 2.5pt"><font style="font-size: 8pt">Total</font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">–</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td><td style="padding-bottom: 2.5pt"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: Black 2.5pt double; text-align: left"><font style="font-size: 8pt">$</font></td><td style="border-bottom: Black 2.5pt double; text-align: right"><font style="font-size: 8pt">1,731,202</font></td><td style="padding-bottom: 2.5pt; text-align: left"><font style="font-size: 8pt"> </font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="width: 34%; text-align: right"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 12%; border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Number of
Warrants</font></td>
<td style="width: 1%; text-align: center"><font style="font-size: 8pt"> </font></td>
<td style="width: 12%; border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Number of
Common Shares Underlying Warrants</font></td>
<td style="width: 1%; text-align: center"><font style="font-size: 8pt"> </font></td>
<td style="width: 12%; border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Weighted
Average Exercise Price $</font></td>
<td style="width: 1%; text-align: center"><font style="font-size: 8pt"> </font></td>
<td style="width: 12%; border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Weighted
Average Remaining Contractual Life (in years)</font></td>
<td style="width: 1%; text-align: center"><font style="font-size: 8pt"> </font></td>
<td style="width: 12%; border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Aggregate
Intrinsic Value (000)$</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font: 8pt Times New Roman, Times, Serif">Outstanding, December 31, 2014</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">45,906</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">45,906</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">40.46</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1.45</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Granted </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">5,985,000</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,992,500</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7.48</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font: 8pt Times New Roman, Times, Serif">Outstanding, September 30, 2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">6,030,906</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3,038,406</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7.98</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">5.16</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Exercisable, September 30, 2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">45,906</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">45,906</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">40.46</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.71</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td><font style="font-size: 8pt"> </font></td></tr></table>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"><tr style="vertical-align: bottom"><td style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Options/Shares</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Options/Shares</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Options</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Available</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Total </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Stock
Plan</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Issued</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Outstanding</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">For
Grant</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Authorized</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 36%"><font style="font: 8pt Times New Roman, Times, Serif">2005 Stock Incentive Plan</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,756,356</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,107,342</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3,243,046</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">5,818,388</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">2014 Stock Option and Incentive Plan</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">210,000</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">175,000</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3,790,000</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4,000,000</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,966,356</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,282,342</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7,033,046</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">9,818,388</font></td>
<td><font style="font-size: 8pt"> </font></td></tr></table>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"><tr style="vertical-align: bottom"><td><font style="font-size: 8pt"></font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Weighted</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Weighted</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Average</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Average</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Remaining</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Aggregate</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Number of</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Exercise</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Contractual</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Intrinsic</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Options</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Price</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Life
(in years)</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Value</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 36%"><font style="font: 8pt Times New Roman, Times, Serif">Outstanding, December 31, 2014</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,245,381</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">12.03</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">8.12</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">12,110</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Granted</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">100,000</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">6.29</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font: 8pt Times New Roman, Times, Serif">Forfeited/canceled</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(63,039</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">)</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">28.59</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Outstanding, September 30, 2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,282,342</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">11.33</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7.47</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Vested and expected to vest at September 30, 2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,187,959</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">11.49</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7.41</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Exercisable, September 30, 2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,556,318</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">13.11</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">6.82</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font-size: 8pt"> </font></td></tr></table>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"><tr style="vertical-align: bottom"><td nowrap="nowrap" style="width: 68%"><font style="font-size: 8pt"></font></td>
<td nowrap="nowrap" style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 15%; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">September 30,</font></td>
<td nowrap="nowrap" style="width: 1%; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="width: 15%; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">September 30,</font></td></tr>
<tr style="vertical-align: bottom">
<td nowrap="nowrap"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">2015</font></td>
<td nowrap="nowrap" style="text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">2014</font></td></tr>
<tr style="background-color: rgb(238,238,238)">
<td nowrap="nowrap" style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Risk-free interest rate </font></td>
<td nowrap="nowrap" style="vertical-align: bottom"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">1.59 –
2.07%</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">.02 –
2.29%</font></td></tr>
<tr style="background-color: White">
<td nowrap="nowrap" style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Expected life of the options
</font></td>
<td nowrap="nowrap" style="vertical-align: bottom"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">5.00 -
6.25 years</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">5.00 -
6.25 years</font></td></tr>
<tr style="background-color: rgb(238,238,238)">
<td nowrap="nowrap" style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Expected volatility </font></td>
<td nowrap="nowrap" style="vertical-align: bottom"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">93 - 124%</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">112 -
148%</font></td></tr>
<tr style="background-color: White">
<td nowrap="nowrap" style="vertical-align: top"><font style="font: 8pt Times New Roman, Times, Serif">Expected dividend yield </font></td>
<td nowrap="nowrap" style="vertical-align: bottom"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">0%</font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt"> </font></td>
<td nowrap="nowrap" style="vertical-align: bottom; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">0%</font></td></tr></table>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"><tr style="vertical-align: bottom"><td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Number
of</font><font style="font-size: 8pt"><br />
<font style="font-family: Times New Roman, Times, Serif">Shares</font><br />
<font style="font-family: Times New Roman, Times, Serif">Underlying Restricted </font><br />
<font style="font-family: Times New Roman, Times, Serif">Units</font></font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Weighted</font><font style="font-size: 8pt"><br />
<font style="font-family: Times New Roman, Times, Serif">Average</font><br />
<font style="font-family: Times New Roman, Times, Serif">Grant-Date </font><br />
<font style="font-family: Times New Roman, Times, Serif">Fair Value </font><br />
<font style="font-family: Times New Roman, Times, Serif">per Share</font></font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Weighted
</font><font style="font-size: 8pt"><br />
<font style="font-family: Times New Roman, Times, Serif">Average</font><br />
<font style="font-family: Times New Roman, Times, Serif">Remaining</font><br />
<font style="font-family: Times New Roman, Times, Serif">Recognition</font><br />
<font style="font-family: Times New Roman, Times, Serif">Period</font><br />
<font style="font-family: Times New Roman, Times, Serif">(in years)</font></font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 52%"><font style="font: 8pt Times New Roman, Times, Serif">Outstanding, December 31, 2014</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">493,000</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">    7.28</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2.60</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Granted</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">10,000</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">6.62</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font: 8pt Times New Roman, Times, Serif">Vested</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(155,998</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">)</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7.25</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Outstanding, September 30, 2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">347,002</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7.16</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1.93</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Unearned stock-based compensation expense of outstanding restricted
units</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,305,357</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td></tr></table>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"><tr style="vertical-align: bottom"><td><font style="font: 8pt Times New Roman, Times, Serif">Three Months Ended</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">September 30,</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">September 30,</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">2014</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 68%"><font style="font: 8pt Times New Roman, Times, Serif">Research and development</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">546,688</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">178,004</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">General and administrative</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">980,122</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">348,405</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,526,810</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">526,409</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Nine Months Ended</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">September 30,</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">September 30,</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">2014</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 68%"><font style="font: 8pt Times New Roman, Times, Serif">Research and development</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,639,181</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">353,333</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">General and administrative</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,889,056</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">881,836</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4,528,237</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,235,169</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
</table>
500000
0
303608
0
5693377
0
3015
123498
-32500
123
-137598
137475
32500
137475
137475
0
-137475
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The following tables reconcile the
change in fair value for measurements categorized within Level 3 of the fair value hierarchy:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Warrant
Liabilities</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 84%"><font style="font: 8pt Times New Roman, Times, Serif">Balance at December 31, 2014</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">16,255</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Addition of warrant liability</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">11,140,771</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font: 8pt Times New Roman, Times, Serif">Total change in fair value for the period included in earnings</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(3,313,920)</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Balance at September 30, 2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7,843,106</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Warrant
Overallotment Liabilities</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 84%"><font style="font: 8pt Times New Roman, Times, Serif">Balance at December 31, 2014</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 13%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Addition of warrant overallotment liability</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">628,767</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td><font style="font: 8pt Times New Roman, Times, Serif">Total change in fair value for the period included in earnings</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(628,767)</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td><font style="font: 8pt Times New Roman, Times, Serif">Balance at September 30, 2015</font></td>
<td><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">Gains included in earnings for the
nine months ended September 30, 2015 are reported as follows:</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt">  </font></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"> </font></td>
<td><font style="font-size: 8pt"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Adjustments
to fair value of derivatives</font></td>
<td><font style="font-size: 8pt"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 84%"><font style="font: 8pt Times New Roman, Times, Serif">Total gain included in earnings</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td>
<td style="border-bottom: black 2.25pt double; width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; text-align: right; width: 13%"><font style="font: 8pt Times New Roman, Times, Serif">3,313,920</font></td>
<td style="width: 1%"><font style="font-size: 8pt"> </font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
6000000
28400000
300245
322304
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">On August 18, 2015, the Company entered
into a Loan and Security Agreement (the “Loan and Security Agreement”) with Silicon Valley Bank ( “SVB”),
pursuant to which SVB made certain term loans (the “Term Loans”) to the Company. The principal aggregate amount of up
to $10.0 million, comprised of: (i) a $6.0 million term loan, which was funded at the closing (the “Term A Loan”);
and (ii) subject to the terms and conditions of the Loan and Security Agreement, an additional term loan totaling $4.0 million
(the “Term B Loan”) which was not funded as of September 30, 2015. The Loan and Security Agreement provides for interest-only
payments through July 1, 2016 at a current per annum interest of 6.5%, subject to the adjustment described in the Loan and Security
Agreement, and a final payment of 8% of amounts drawn. The final payment of 8% of amounts drawn is being accreted through interest
expense to increase the carrying value of the debt throughout the life of the loan. The Company also paid to SVB approximately
$19,000, to cover legal costs associated with the Loan and Security Agreement.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">The Loan and Security Agreement provides
that the Company shall repay the principal balance of the Term Loans in 36 monthly installments starting on August 1, 2016 and
continuing through July 1, 2019. The interest-only period may be extended from 12 months to 18 months based on certain conditions
defined in the Loan and Security Agreement. The entire term loan principal balance and all accrued but unpaid interest will be
due and payable on July 1, 2019. At its option, the Company may prepay all or any part of the outstanding term loan subject to
a prepayment premium (3% if the principal balance is outstanding less than one year, 2% if the principal balance is outstanding
more than one year but less than two years, 1% if the principal balance is outstanding through the end of year three and none
thereafter).</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">In connection with the Loan and Security
Agreement, the Company granted SVB a security interest in all of the Company’s personal property now owned or hereafter
acquired, excluding intellectual property (and a negative pledge on intellectual property). The Loan and Security Agreement also
provides for standard indemnification of SVB and contains representations, warranties and certain covenants of the Company.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 8pt">As of September 30, 2015 the carrying
value of the debt outstanding, net of issuance costs and discounts, is $5,996,985 with an annual effective interest rate of approximately
9.2%.</font></p>
.065
2016-07-01
.092
5996985
45906
2015-12-22
1375000
155998
7.25
0
30378
262877
0