| Stockholders' Deficiency | 7. StockholdersÂ’ Deficiency Preferred Stock The Company has
authorized a total of 5,000,000 shares of preferred stock, par value $0.001 per share. As of September 30, 2015 and December 31,
2014, 1,250,000 shares were designated as 9% Cumulative Convertible Preferred Stock (non-voting, “9% Preferred Stock”);
37,500 shares were designated as Series B Convertible Preferred Stock (non-voting, “Series B Preferred Stock”); 205,000
shares were designated as Series A Junior Participating Preferred Stock (non-voting, “Series A Junior Participating Preferred
Stock”); and 1,700 shares were designated as Series G 1.5% Convertible Preferred Stock. Accordingly, as of September 30,
2015, 3,505,800 shares of preferred stock were undesignated and may be issued with such rights and powers as the Board of Directors
may designate. There were no shares
of 9% Preferred Stock or Series A Junior Participating Preferred Stock outstanding as of September 30, 2015 or December 31, 2014. Series B Preferred
Stock outstanding as of September 30, 2015 and December 31, 2014 consisted of 37,500 shares issued in a May 1991 private placement.
Each share of Series B Preferred Stock is convertible into approximately 0.09812 shares of common stock at an effective conversion
price of $6.795 per share of common stock, which is subject to adjustment under certain circumstances. As of September 30, 2015
and December 31, 2014, the shares of Series B Preferred Stock outstanding are convertible into 3,679 shares of common stock. The
Company may redeem the Series B Preferred Stock for $25,001, equivalent to $0.6667 per share, an amount equal to its liquidation
preference, at any time upon 30 days prior notice. Series G 1.5% Convertible Preferred
Stock On March 18, 2014,
the Company entered into Securities Purchase Agreements with various accredited investors (the “Initial Purchasers”),
pursuant to which the Company sold an aggregate of 753.22 shares of its Series G 1.5% Convertible Preferred Stock for a purchase
price of $1,000 per share, or an aggregate purchase price of $753,220. This financing represented the initial closing on the private
placement (the “Series G Private Placement”). The Initial Purchasers in this tranche of the Series G Private Placement
consisted of (i) Dr. Arnold S. Lippa, the CompanyÂ’s Chairman, then Chief Executive Officer and a member of the CompanyÂ’s
Board of Directors, who invested $250,000 for 250 shares of Series G 1.5% Convertible Preferred Stock, and (ii) new, non-affiliated,
accredited investors. Neither the Series G 1.5% Convertible Preferred Stock nor the underlying shares of common stock have any
registration rights. The placement agents
and selected dealers in connection with the initial tranche of the Series G Private Placement received cash fees totaling $3,955
as compensation and an obligation of the Company to issue warrants to acquire 12,865,151 shares of common stock, totaling approximately
5.6365% of the shares of common stock into which the Series G 1.5% Convertible Preferred Stock may convert, issuable upon completion
of all closings of the Series G Private Placement and exercisable for five years, at a fixed price of $0.00396, which is 120% of
the conversion price at which the Series G 1.5% Convertible Preferred Stock may convert into the CompanyÂ’s common stock.
The stock warrants issuable to the placement agents and selected dealers in connection with the initial tranche of the Series G
Private Placement were valued pursuant to the Black-Scholes option-pricing model at $443,848. The Series G 1.5%
Convertible Preferred Stock has a stated value of $1,000 per share and a stated dividend at the rate per share (as a percentage
of the Stated Value per share) of 1.5% per annum, compounded quarterly, payable quarterly within 15 calendar days of the end of
each fiscal quarter of the Company, in duly authorized, validly issued, fully paid and non-assessable shares of Series G 1.5% Convertible
Preferred Stock, which may include fractional shares of Series G 1.5% Convertible Preferred Stock. The Series G 1.5%
Convertible Preferred Stock became convertible, beginning 60 days after the last share of Series G 1.5% Convertible Preferred Stock
is issued in the Series G Private Placement, at the option of the holder, into common stock at the applicable conversion price,
at a rate determined by dividing the Stated Value of the shares of Series G 1.5% Convertible Preferred Stock to be converted by
the conversion price, subject to adjustments for stock dividends, splits, combinations and similar events as described in the form
of Certificate of Designation. As the stated value of the Series G 1.5% Convertible Preferred Stock is $1,000 per share, and the
fixed conversion price is $0.0033, each share of Series G 1.5% Convertible Preferred Stock is convertible into 303,030.3 shares
of common stock. In addition, the Company has the right to require the holders of the Series G 1.5% Convertible Preferred Stock
to convert such shares into common stock under certain enumerated circumstances as set forth in the Certificate of Designation. Upon either (i)
a Qualified Public Offering (as defined in the Certificate of Designation) or (ii) the affirmative vote of the holders of a majority
of the Stated Value of the Series G 1.5% Convertible Preferred Stock issued and outstanding, all outstanding shares of Series G
1.5% Convertible Preferred Stock, plus all accrued or declared, but unpaid, dividends thereon, shall be mandatorily converted into
such number of shares of common stock determined by dividing the Stated Value of such Series G 1.5% Convertible Preferred Stock
(together with the amount of any accrued or declared, but unpaid, dividends thereon) by the Conversion Price (as defined in the
Certificate of Designation). If not earlier converted,
the Series G 1.5% Convertible Preferred Stock shall be redeemed by conversion on the two year anniversary of the date the last
share of Series G 1.5% Convertible Preferred Stock is issued in the Series G Private Placement at the Conversion Price. Except as described
in the Certificate of Designation, holders of the Series G 1.5% Convertible Preferred Stock will vote together with holders of
the Company common stock on all matters, on an as-converted to common stock basis, and not as a separate class or series (subject
to limited exceptions). In the event of
any liquidation or winding up of the Company prior to and in preference to any Junior Securities (including common stock), the
holders of the Series G 1.5% Convertible Preferred Stock will be entitled to receive in preference to the holders of the Company
common stock a per share amount equal to the Stated Value, plus any accrued and unpaid dividends thereon. Purchasers in the
Series G Private Placement of the Series G 1.5% Convertible Preferred Stock executed written consents in favor of (i) approving
and adopting an amendment to the CompanyÂ’s certificate of incorporation that increases the number of authorized shares of
the Company to 1,405,000,000, 1,400,000,000 of which are shares of common stock and 5,000,000 of which are shares of preferred
stock, and (ii) approving and adopting the Cortex Pharmaceuticals, Inc. 2014 Equity, Equity-Linked and Equity Derivative Incentive
Plan. The shares of Series
G 1.5% Convertible Preferred Stock were offered and sold without registration under the Securities Act of 1933, as amended (the
“Securities Act”), in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as provided in Rule
506(b) of Regulation D promulgated thereunder. The shares of Series G 1.5% Convertible Preferred Stock and the CompanyÂ’s
common stock issuable upon conversion of the shares of Series G 1.5% Convertible Preferred Stock have not been registered under
the Securities Act or any other applicable securities laws, and unless so registered, may not be offered or sold in the United
States except pursuant to an exemption from the registration requirements of the Securities Act. On April 17, 2014,
the Company entered into Securities Purchase Agreements with various accredited investors (together with the Initial Purchasers
as defined above, the “Purchasers”), pursuant to which the Company sold an aggregate of an additional 175.28 shares
of its Series G 1.5% Convertible Preferred Stock, for a purchase price of $1,000 per share, or an aggregate purchase price of $175,280.
This was the second and final closing on the Series G Private Placement, in which a total of 928.5 shares of Series G 1.5% Convertible
Preferred Stock were sold for an aggregate purchase price of $928,500. The Purchasers in the second and final tranche of the Series
G Private Placement consisted of new, non-affiliated, accredited investors and non-management investors who had also invested in
the first closing of the Series G Private Placement. One of the investors in this second and final closing of the Series G Private
Placement was an affiliate of an associated person of Aurora, a related party (see Note 8). Neither the Series G 1.5% Convertible
Preferred Stock nor the underlying shares of common stock have any registration rights. The placement agents
and selected dealers in connection with the second tranche of the Series G Private Placement received cash fees of $3,465 as compensation
and an obligation of the Company to issue warrants to acquire 6,386,120 shares of common stock, totaling approximately 12% of the
shares of common stock into which the Series G 1.5% Convertible Preferred Stock may convert, issuable upon completion of all closings
of the Series G Private Placement and exercisable for five years, at a fixed price of $0.00396, which is 120% of the conversion
price at which the Series G 1.5% Convertible Preferred Stock may convert into the CompanyÂ’s common stock. The stock warrants
issuable to the placement agents and selected dealers in connection with the second closing of the Series G Private Placement were
valued pursuant to the Black-Scholes option-pricing model at $220,321. As the stated value
of the Series G 1.5% Convertible Preferred Stock is $1,000 per share, and the fixed conversion price is $0.0033, each share of
Series G 1.5% Convertible Preferred Stock is convertible into 303,030.3 shares of common stock. The aggregate of 928.5 shares of
Series G 1.5% Convertible Preferred Stock sold in all of the closings of the Series G Private Placement were initially convertible
into a total of 281,363,634 shares of common stock. The Company recorded
a dividend on the Series G 1.5% Convertible Preferred Stock of $1,108 and $3,560 for the three months ended September 30, 2015
and 2014, respectively, which was paid through the issuance of an additional 1.1 shares and 3.6 shares, respectively, of Series
G 1.5% Convertible Preferred Stock. The Company recorded a dividend on the Series G 1.5% Convertible Preferred Stock of $5,880
and $7,364 for the nine months ended September 30, 2015 and 2014, respectively, which was paid through the issuance of an additional
5.9 shares and 7.4 shares, respectively, of Series G 1.5% Convertible Preferred Stock. The warrants that
the placement agents and selected dealers received in connection with all closings of the Series G Private Placement, which were
issued effective April 17, 2014, represent the right to acquire 19,251,271 shares of common stock exercisable for five years at
a fixed price of $0.00396, which is 120% of the conversion price at which the Series G 1.5% Convertible Preferred Stock may convert
into the CompanyÂ’s common stock. Aurora, a related
party (see Note 8), was one of the placement agents for this financing, and Aurora and its designees and/or affiliates received
fees in connection with this financing in the form of cash of $2,800 and warrants to purchase 10,427,029 shares of common stock
during the year ended December 31, 2014. Both Dr. Arnold S. Lippa and Jeff E. Margolis, officers and directors of the Company since
March 22, 2013, have indirect ownership interests in Aurora through interests held in its members, and Jeff E. Margolis is also
an officer of Aurora. Effective August
25, 2014, a placement agent warrant issued on April 17, 2014 in conjunction with the Series G Private Placement of the Series G
1.5% Convertible Preferred Stock, representing the right to acquire a total of 2,112,879 shares of common stock, was exercised
in full on a cashless basis, resulting in the net issuance of 1,942,124 shares of common stock. The gross exercise price of the
placement agent warrant that was exercised on a cashless basis was $8,367. Effective September
5, 2014, a placement agent warrant issued on April 17, 2014 in conjunction with the Series G Private Placement of the Series G
1.5% Convertible Preferred Stock, representing the right to acquire a total of 2,412,878 shares of common stock, was exercised
in part (50%, or 1,206,439 shares) on a cashless basis, resulting in the net issuance of 1,126,814 shares of common stock. The
gross exercise price of the placement agent warrant that was exercised on a cashless basis was $4,778. Effective September
26, 2014, a placement agent warrant issued on April 17, 2014 in conjunction with the Series G Private Placement of the Series G
1.5% Convertible Preferred Stock, representing the right to acquire a total of 1,400,000 shares of common stock, was exercised
in full on a cashless basis, resulting in the net issuance of 1,326,080 shares of common stock. The gross exercise price of the
placement agent warrant that was exercised on a cashless basis was $5,544. During the nine
months ended September 30, 2014, placement warrants issued on April 17, 2014 in conjunction with the Series G Private Placement
of the Series G 1.5% Convertible Preferred Stock were exercised on a cashless basis, resulting in the net issuance of 4,395,018
shares of common stock. The gross exercise price of the placement agent warrants that were exercised on a cashless basis was $18,689. Effective August
25, 2015, a placement agent warrant issued on April 17, 2014 in conjunction with the Series G Private Placement of the Series G
1.5% Convertible Preferred Stock, representing the right to acquire a total of 2,412,878 shares of common stock, was exercised
in part (50%, or 1,206,439 shares) on a cashless basis, resulting in the net issuance of 1,087,001 shares of common stock. The
gross exercise price of the placement agent warrant that was exercised on a cashless basis was $4,778. Effective December
16, 2014, 66.68888 shares of Series G 1.5% Convertible Preferred Stock, including 0.68888 dividend shares, were converted into
20,208,752 shares of common stock on a cashless basis. During the three
months ended March 31, 2015, 25.323705 shares of Series G 1.5% Convertible Preferred Stock, including 0.323705 dividend shares,
were converted into 7,673,850 shares of common stock on a cashless basis. During the three months ended June 30, 2015, an aggregate
of 538.208190 shares of Series G 1.5% Convertible Preferred Stock, including 8.728190 dividend shares, were converted into 163,093,392
shares of common stock on a cashless basis. During the three months ended September 30, 2015, an aggregate of 57.506190 shares
of Series G 1.5% Convertible Preferred Stock, including 1.206190 dividend shares, were converted into 17,426,119 shares of common
stock on a cashless basis. During the nine months ended September 30, 2015, 621.038085 shares of Series G 1.5% Convertible Preferred
Stock, including 10.258085 dividend shares, were converted into 188,193,359 shares of common stock on a cashless basis. As of September
30, 2015, the remaining outstanding shares of Series G 1.5% Convertible Preferred Stock were convertible into 78,054,277 shares
of the CompanyÂ’s common stock, including 1,775,490 shares attributable to the 1.5% dividend on such shares of $5,859 accrued
as of such date. As of December 31, 2014, the remaining outstanding shares of Series G 1.5% Convertible Preferred Stock were convertible
into 264,465,728 shares of the CompanyÂ’s common stock, including 3,102,094 shares attributable to the 1.5% dividend on such
shares of $10,237 accrued as of such date. Common Stock As discussed above,
the holders of the Series G 1.5% Convertible Preferred Stock approved and adopted an amendment to increase the number of authorized
shares of the Company to 1,405,000,000, 1,400,000,000 of which are shares of common stock and 5,000,000 of which are shares of
preferred stock. The Company also sought, and on April 17, 2014 obtained by written consent, sufficient votes of the holders of
its common stock, voting as a separate class, to effect this amendment. A certificate of Amendment to the CompanyÂ’s Certificate
of Incorporation to effect the increase in the authorized shares was filed with the Secretary of State of the State of Delaware
on April 17, 2014. On April 14, 2014,
the Board of Directors of the Company awarded a total of 57,000,000 shares of common stock of the Company, including awards of
15,000,000 shares to each of the CompanyÂ’s three executive officers, who were also all of the directors of the Company at
that time, and 4,000,000 shares and 8,000,000 shares to two other individuals. The individual who received the 8,000,000 shares
was an associated person of Aurora. These awards were made to those individuals on that date as compensation for services rendered
through March 31, 2014. Prior to these awards, none of the officers or directors of the Company at that time had earned or received
any cash compensation from the Company since joining the Company in March and April 2013, and there were no prior compensation
arrangements or agreements with such individuals. As the initial closing of the Series G 1.5% Convertible Preferred Stock was completed
on March 18, 2014, and such closing represented approximately 81% of the total amount of such financing, the CompanyÂ’s Board
of Directors determined that it was appropriate at that time to compensate such officers for the period since they joined the Company
in March and April 2013 through March 31, 2014. Such compensation was concluded on April 14, 2014 with the issuance of the aforementioned
stock awards. Accordingly, as a result of these factors, the fair value of these stock awards of $2,280,000 was charged to operations
effective as of March 18, 2014. The stock awards were valued at $0.04 per share, which was the closing price of the CompanyÂ’s
common stock on March 18, 2014. These stock awards were made under the CompanyÂ’s 2014 Equity, Equity-Linked and Equity Derivative
Incentive Plan. On September 3,
2014, James Sapirstein and Kathryn MacFarlane were appointed to the Board of Directors of the Company, and in connection therewith,
they were awarded an aggregate of 4,000,000 shares of common stock of the Company under the CompanyÂ’s 2014 Equity, Equity-Linked
and Equity Derivative Incentive Plan, consisting of 2,000,000 shares to each new director, vesting 50% upon appointment to the
Board of Directors, 25% on September 30, 2014 and 25% on December 31, 2014. The stock awards were valued at $0.049 per share, which
was the closing price of the CompanyÂ’s common stock on September 3, 2014. During the period September 3, 2014 through December
31, 2014, the Company recorded charges to operations of $196,000 with respect to these stock awards. On September 18,
2014, Dr. John Greer, Ph.D. was appointed to the position of Chairman of the CompanyÂ’s Scientific Advisory Board. Dr. Greer
is Professor of Physiology and Alberta Innovates – Health Solutions Senior Scientist with the Neuroscience and Mental Health
Institute at the University of Alberta, holds two grants regarding research into neuromuscular control of breathing, and is the
inventor on the method of treatment patents licensed by the Company with respect to ampakines. In connection with the appointment
of Dr. Greer as Chairman of the CompanyÂ’s Scientific Advisory Board on September 18, 2014, the Board of Directors awarded
2,000,000 shares of common stock of the Company to Dr. Greer (through his wholly-owned consulting company, Progress Scientific,
Inc.), vesting 25% upon appointment, 25% on September 30, 2014, 25% on December 31, 2014, and 25% on March 31, 2015. The stock
award was valued at $0.066 per share, which was the closing price of the CompanyÂ’s common stock on September 18, 2014. This
stock award was made under the CompanyÂ’s 2014 Equity, Equity-Linked and Equity Derivative Incentive Plan. During the period
September 18, 2014 through December 31, 2014, the Company recorded charges to operations of $99,000 with respect to this stock
award. During the three months ended March 31, 2015, the Company recorded a final charge to operations of $33,000 with respect
to this stock award. Effective October
15, 2014, Richard Purcell was appointed as the CompanyÂ’s Senior Vice President of Research and Development. In conjunction
with his appointment, the Company agreed to issue to Mr. Purcell 2,000,000 shares of the CompanyÂ’s common stock, with 25%
of such stock grant vesting and issuable every three months after the date of his appointment (i.e., on January 15, 2015, April
15, 2015, July 15, 2015 and October 15, 2015), subject to Mr. PurcellÂ’s continued relationship with the Company on each of
the vesting dates. The stock grant was made under the CompanyÂ’s 2014 Equity, Equity-Linked and Equity Derivative Incentive
Plan. Based on the CompanyÂ’s closing stock price on October 15, 2014 of $0.078 per share, during the three months and nine
months ended September 30, 2015, the Company recorded charges to operations of $39,000 and $117,000, respectively, with respect
to this stock award. At September 30, 2015, total unrecognized compensation expense for the outstanding unvested stock awards was
$39,000, which will be recognized by the Company as charges to operations on October 15, 2015. On August 28, 2015,
the Company entered into a Second Amended and Restated Common Stock and Warrant Purchase Agreement (the “Purchase Agreement”)
with various accredited investors (each, a “Purchaser”, and together with purchasers in subsequent closings in the
private placement, the “Purchasers”), pursuant to which the Company sold units for aggregate cash consideration of
$721,180, with each unit consisting of (i) one share of the CompanyÂ’s common stock, representing an aggregate of 34,292,917
shares of common stock, and (ii) one warrant to purchase two additional shares of common stock, representing an aggregate of 68,585,834
warrants. This financing represented the initial closing of a private placement of up to $3,000,000. On September 28,
2015, the Company entered into a second closing of the Purchase Agreement with various additional Purchasers, pursuant to which
the Company sold units for aggregate cash consideration of $218,530, with each unit consisting of (i) one share of the CompanyÂ’s
common stock, representing an aggregate of 10,391,349 shares of common stock, and (ii) one warrant to purchase two additional shares
of common stock, representing an aggregate of 20,782,698 Warrants. This second closing brought the aggregate amount raised under
this private placement as of September 30, 2015 to $939,710. The Company entered into a third closing of the Purchase Agreement
on November 2, 2015, as described at Note 10. The price per unit
in each closing of the private placement was $0.02103 (the “Per Unit Price”). The Warrants are exercisable through
September 30, 2020 and may be exercised at a price of $0.02103 for each share of Common Stock to be acquired upon exercise. The
Purchasers consisted of non-affiliated investors, other than James S. J. Manuso, the recently-appointed President and Chief Executive
Officer of the Company, who invested $250,000 in the initial closing of the private placement. The Warrants do not contain any
cashless exercise provision or reset rights. No registration
rights were granted to any Purchaser in this private placement with respect to (i) the shares of common stock issued as part of
the units, (ii) the warrants, or (iii) the shares of common stock issuable upon exercise of the warrants. Placement agent
fees, brokerage commissions, and similar payments were made in the form of cash and warrants to qualified referral sources in connection
with certain sales of the shares of common stock and warrants, while other sales, including the sale to James S. J. Manuso, did
not result in any fees or commissions. Accordingly, the amount of such fees, on a percentage basis, varies in each closing. The
fees paid to such referral sources for the initial closing in cash totaled $47,118, or 6.5% of the aggregate amount paid for the
units sold. The fees paid in warrants for the initial closing to such referral sources (the warrants paid to qualified referral
sources are referred to herein as the “Placement Agent Warrants”) consist of warrants for 2,240,517 shares of common
stock, or that number of shares equal to 6.5% of the number of shares of common stock issued as part of the units, but not the
shares underlying the warrants. In connection with the second closing, fees paid to referral sources in cash totaled $18,603, or
8.5% of the aggregate amount paid for the units sold, and 884,594 Placement Agent Warrants were issued, or warrants for that number
of shares equal to 8.5% of the number of shares of common stock issued as part of the units, but not the shares underlying the
Warrants. Placement Agent Warrants are exercisable until September 30, 2020 at the Per Unit Price. The Placement Agent Warrants
have a cashless exercise provision. One of the placement agents that received Placement Agent Warrants is Aurora. Both Arnold S.
Lippa and Jeff E. Margolis, officers and directors of the Company, have indirect ownership interests in Aurora through interests
held in its members, and Jeff E. Margolis is also an officer of Aurora. As a result, both Arnold S. Lippa and Jeff E. Margolis,
or entities in which they have interests, will receive a portion of the Placement Agent Warrants awarded in this private placement. The shares of common
stock and warrants were offered and sold without registration under the Securities Act of 1933, as amended (the “Securities
Act”) in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as provided in Rule 506(b) of Regulation
D promulgated thereunder. None of the shares of common stock issued as part of the units, the warrants, the common stock issuable
upon exercise of the warrants, the Placement Agent Warrants or the shares of common stock issuable upon exercise of the Placement
Agent Warrants have been registered under the Securities Act or any other applicable securities laws, and unless so registered,
may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities
Act. See Note 6 for information
with respect to the issuance of common stock in connection with the settlement of debt obligations. Information with
respect to the issuance of common stock upon the exercise of common stock purchase warrants issued to placement agents in connection
with the Series G Private Placement of the Series G 1.5% Convertible Preferred Stock is provided above at “Series G 1.5%
Convertible Preferred Stock.” Common Stock Warrants In connection with
a private placement of debt on June 25, 2012, the Company issued to Samyang two-year detachable warrants to purchase 4,000,000
shares of the CompanyÂ’s common stock at a fixed exercise price of $0.056 per share. The warrants had a call right for consideration
of $0.001 per share, in favor of the Company, to the extent that the weighted average closing price of the CompanyÂ’s common
stock exceeded $0.084 per share for each of ten consecutive trading days, subject to certain circumstances. The warrants expired
unexercised in June 2014. Information with
respect to the issuance and exercise of common stock purchase warrants with respect to placement agents in connection with the
Series G Private Placement of the Series G 1.5% Convertible Preferred Stock is provided above at “Series G 1.5% Convertible
Preferred Stock.” Information with respect to the issuance and exercise of common stock purchase warrants in connection with
the 10% Convertible Note Payable and Warrant Purchase Agreement is provided at Note 4. A summary of warrant
activity for the nine months ended September 30, 2015 is presented below.
Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in Years)
Warrants outstanding at December 31, 2014 25,686,096 $ 0.01744
Issued 107,817,327 0.02288
Exercised (2,223,439 ) 0.01816
Expired - -
Warrants outstanding at September 30, 2015 131,279,984 $ 0.02201 4.07
Warrants exercisable at December 31, 2014 25,686,096 $ 0.01744
Warrants exercisable at September 30, 2015 131,279,984 $ 0.02201 4.07 The exercise prices
of common stock warrants outstanding and exercisable are as follows at September 30, 2015:
Exercise Price Warrants Outstanding (Shares) Warrants Exercisable (Shares) Expiration Date
$ 0.00396 13,325,514 13,325,514 April 17, 2019
$ 0.02103 92,493,643 92,493,643 September 30, 2020
$ 0.03500 25,460,827 25,460,827 September 15, 2016
131,279,984 131,279,984 Based on a fair
market value of $0.0278 per share on September 30, 2015, the intrinsic value of exercisable in-the-money common stock warrants
was $943,862 as of September 30, 2015. A summary of warrant
activity for the nine months ended September 30, 2014 is presented below.
Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in Years)
Warrants outstanding at December 31, 2013 4,000,000 $ 0.05600
Issued 19,251,271 0.00396
Exercised (4,719,318 ) 0.00396
Expired (4,000,000 ) 0.05600
Warrants outstanding at September 30, 2014 14,531,953 $ 0.00396 4.55
Warrants exercisable at December 31, 2013 4,000,000 $ 0.05600
Warrants exercisable at September 30, 2014 14,531,953 $ 0.00396 4.55 The exercise prices
of common stock warrants outstanding and exercisable are as follows at September 30, 2014:
Exercise Price Warrants Outstanding (Shares) Warrants Exercisable (Shares) Expiration Date
$ 0.00396 14,531,953 14,531,953 April 17, 2019
Based on a fair
market value of $0.069 per share on September 30, 2014, the intrinsic value of exercisable in-the-money common stock warrants was
$945,158 as of September 30, 2014. Stock Options In connection with
the initial closing of the Series G Private Placement completed on March 18, 2014, the stockholders of the Company holding a majority
of the votes to be cast on the issue approved the adoption of the CompanyÂ’s 2014 Equity, Equity-Linked and Equity Derivative
Incentive Plan (the “2014 Plan”), which had been previously adopted by the Board of Directors of the Company, subject
to stockholder approval. The Plan permits the grant of options and restricted stock with respect to up to 105,633,002 shares of
common stock, in addition to stock appreciation rights and phantom stock, to directors, officers, employees, consultants and other
service providers of the Company. On July 17, 2014,
the Board of Directors of the Company awarded stock options to purchase a total of 15,000,000 shares of common stock of the Company,
consisting of options for 5,000,000 shares to each of the CompanyÂ’s then three executive officers, who were also all of the
directors of the Company at that time. The stock options were awarded as compensation for those individuals through December 31,
2014. The stock options vested in three equal installments on July 17, 2014 (at issuance), September 30, 2014, and December 31,
2014, and expire on July 17, 2019. The exercise price of the stock options was established on the grant date at $0.05 per share,
as compared to the closing market price of the CompanyÂ’s common stock on such date of $0.044 per share, reflecting an exercise
price premium of $0.006 per share or 13.6%. These awards were made under the CompanyÂ’s 2014 Plan. During the period July
17, 2014 through December 31, 2014, the Company recorded charges to operations of $655,500 with respect to these stock options,
reflecting the grant date fair value of the stock options calculated pursuant to the Black-Scholes option-pricing model. On June 30, 2015,
the Board of Directors adopted the 2015 Stock and Stock Option Plan (the “2015 Plan”). The 2015 Plan provides for,
among other things, the issuance of either or any combination of restricted shares of common stock and non-qualified stock options
to purchase up to 150,000,000 shares of the CompanyÂ’s common stock for periods up to ten years to management, members of
the Board of Directors, consultants and advisors. T |
