| Stockholders' Deficiency | 6. Stockholders 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 March 31, 2016 and December 31, 2015, 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 March 31, 2016, 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 March 31, 2016 and December 31, 2015. Series B Preferred Stock
outstanding as of March 31, 2016 and December 31, 2015 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 March 31, 2016 and December
31, 2015, 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 Chairman of the Companys Board of Directors and then Chief Executive Officer, 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 Companys common stock.
The 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 was 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. 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, would have been 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). To the extent not earlier
converted, the remaining outstanding shares of Series G 1.5% Convertible Preferred Stock were automatically and mandatorily redeemable
by conversion into shares of common stock on April 17, 2016, the two year anniversary of the date that the last shares of Series
G 1.5% Convertible Preferred Stock were issued in the Series G Private Placement, at the Conversion Price of $0.0033 per share.
Information with respect to the conversion of the outstanding shares of Series G 1.5% Convertible Preferred Stock into shares of
common stock on April 17, 2016 is set forth below. Except as described in
the Certificate of Designation, holders of the Series G 1.5% Convertible Preferred Stock voted 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 would have been 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 Companys 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 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 Companys 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 7). 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 Companys common stock. The 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 was 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 $981 and $3,198 for the three months ended March 31, 2016 and 2015,
respectively, which was paid through the issuance of an additional 0.9 shares and 3.2 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 Companys
common stock. Aurora, a related party
(see Note 7), 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, 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. 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. There were no conversions of Series G 1.5% Convertible Preferred Stock into shares of common stock during the
three months ended December 31, 2015. Accordingly, during the year ended December 31, 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 March 31, 2016, the
remaining outstanding shares of Series G 1.5% Convertible Preferred Stock were convertible into 78,650,575 shares of the Companys
common stock, including 2,371,791 shares attributable to the 1.5% dividend on such shares of $7,827 accrued as of such date. As
of December 31, 2015, the remaining outstanding shares of Series G 1.5% Convertible Preferred Stock were convertible into 78,353,485
shares of the Companys common stock, including 2,074,698 shares attributable to the 1.5% dividend on such shares of $6,847
accrued as of such date. On April 17, 2016, the
remaining unconverted 259.7 shares of Series G 1.5% Convertible Preferred Stock outstanding (included accrued but unpaid dividends)
were automatically and mandatorily redeemed by conversion into 78,706,282 newly issued shares of common stock at a conversion price
of $0.0033 per share. 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 Companys 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 September 18, 2014,
Dr. John Greer, Ph.D., was appointed to the position of Chairman of the Companys 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 Companys 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 Companys common stock on September 18, 2014. This stock award was
made under the Companys 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 Companys 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 Companys 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. Purcells continued relationship with the Company on each of the vesting
dates. The stock grant was made under the Companys 2014 Equity, Equity-Linked and Equity Derivative Incentive Plan. Based
on the Companys closing stock price on October 15, 2014 of $0.078 per share, during the three months ended March 31, 2015,
the Company recorded a charge to operations of $39,000 with respect to this stock award. 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 Companys 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 completed 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 Companys 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. On November 2, 2015, the Company completed a third closing of the
Purchase Agreement with various Purchasers, pursuant to which the Company sold units for aggregate cash consideration of $255,000,
with each unit consisting of (i) one share of the Companys common stock, representing an aggregate of 12,125,536 shares
of common stock, and (ii) one warrant to purchase two additional shares of common stock, representing an aggregate of 24,251,072
Warrants. This third closing brought the aggregate amount raised under this private placement as of November 2, 2015 to $1,194,710. The unit price 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 Dr. James S. Manuso, the current President and Chief Executive Officer of the
Company, who invested $250,000 in the initial closing of the private placement, and one other investor who invested $301,180 in
the private placement and became an affiliate of the Company by virtue of his aggregate stock holdings in the Company. The Warrants
do not contain any cashless exercise provisions 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 Dr. James S. 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. In connection
with the third closing, fees paid to referral sources in cash totaled $25,500, or 10% of the aggregate amount paid for the units
sold, and 1,212,553 Placement Agent Warrants were issued, or warrants for that number of shares equal to 10% 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 cashless exercise provisions. 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. In addition to the above
described placement agent fees, brokerage commissions, and similar payments that were made in the form of cash and warrants to
qualified referral sources, the Company also paid $10,164 in cash to other professionals for services related to the three closings. The shares of common stock
and warrants were offered and sold without registration under 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. On January 8, 2016, the
Company initiated a new equity private placement, consisting of units of common stock and warrants, up to an aggregate of $2,500,000,
with each unit consisting of (i) one share of common stock, and (ii) one warrant to purchase two additional shares of common stock.
During the three months ended March 31, 2016, the Company entered into purchase agreements with five accredited and three non-accredited,
non-affiliated investors, pursuant to which an aggregate of 8,775,250 shares of common stock and an aggregate of 17,550,500 warrants
were sold, generating gross proceeds of $194,635. The unit price in the private
placement closings was $0.02218. The warrants are exercisable at $0.0244, for each share of common stock to be acquired, and expire
on February 28, 2021. The warrants have cashless exercise provisions and contain certain blocker provisions limiting
the percentage of shares of the Companys common stock that the purchaser can beneficially own upon conversion to not more
than 4.99% of the issued and outstanding shares immediately after giving effect to the warrant exercise. In the case of an acquisition
in which the Company is not the surviving entity, the holder of the warrant would receive from any surviving entity or successor
to the Company, in exchange for the warrant, a new warrant from the surviving entity or successor to the Company, substantially
in the form of the existing warrant and with an exercise price adjusted to reflect the nearest equivalent exercise price of common
stock (or other applicable equity interest) of the surviving entity that would reflect the economic value of the warrant, but in
the surviving entity. No registration
rights were granted to the purchasers in the 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. No placement agent
fees, brokerage commissions, finders fees or similar payments were made in the form of cash or warrants to qualified referral
sources in connection with the sale of the shares of common stock and warrants. The Company paid $3,429 in cash to other professionals
for services related to the seven closings. See Note 5 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 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 three months ended March 31, 2016 is presented below.
Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in Years)
Warrants outstanding at December 31, 2015 156,743,609 $ 0.02185
Issued 23,530,819 0.02267
Exercised - -
Expired - -
Warrants outstanding at March 31, 2016 180,274,428 $ 0.02196 3.81
Warrants exercisable at December 31, 2015 156,743,609 $ 0.02185
Warrants exercisable at March 31, 2016 180,274,428 $ 0.02196 3.81 The exercise prices
of common stock warrants outstanding and exercisable are as follows at March 31, 2016:
Exercise Price Warrants Outstanding (Shares) Warrants Exercisable (Shares) Expiration Date
$ 0.00396 13,325,514 13,325,514 April 17, 2019
$ 0.01570 3,350,319 3,350,319 January 29, 2019
$ 0.20000 2,630,000 2,630,000 February 4, 2019
$ 0.02103 117,957,268 117,957,268 September 30, 2020
$ 0.02440 17,550,500 17,550,500 February 28, 2021
$ 0.03500 25,460,827 25,460,827 September 15, 2016
180,274,428 180,274,428 Based on a fair
market value of $0.0227 per share on March 31, 2016, the intrinsic value of exercisable in-the-money common stock warrants was
$477,262 as of March 31, 2016. A summary of warrant
activity for the three months ended March 31, 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 6,419,998 0.03500
Exercised - -
Expired - -
Warrants outstanding at March 31, 2015 32,106,094 $ 0.02095 2.08
Warrants exercisable at December 31, 2014 25,686,096 $ 0.01744
Warrants exercisable at March 31, 2015 32,106,094 $ 0.02095 2.08 The exercise prices
of common stock warrants outstanding and exercisable are as follows at March 31, 2015:
Exercise Price Warrants Outstanding (Shares) Warrants Exercisable (Shares) Expiration Date
$ 0.00396 14,531,953 14,531,953 April 17, 2019
$ 0.03500 17,574,141 17,574,141 September 15, 2016
32,106,094 32,106,094 Based on a fair
market value of $0.0491 per share on March 31, 2015, the intrinsic value of exercisable in-the-money common stock warrants was
$903,768 as of March 31, 2015. 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 Companys 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 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 Companys common stock for periods up to ten years to management, members of
the Board of Directors, consultants and advisors. The Company does not intend to present the 2015 Plan to stockholders for approval.
On August 18, 2015, the Board of Directors increased the number of shares that may be issued under the 2015 Plan to 250,000,000
shares of the Companys common stock. On March 31, 2016, the Board of Directors further increased the number of shares that
may be issued under the 2015 Plan to 500,000,000 shares of the Companys common stock. On June 30, 2015,
the Board of Directors of the Company awarded stock options to purchase a total of 55,000,000 shares of common stock, consisting
of options for 15,000,000 shares to each of the Companys then three executive officers, Dr. Arnold S. Lippa, Jeff E. Margolis
and Robert N. Weingarten, and options for 2,000,000 shares to each of five other individuals who are members of management, the
Companys Scientific Advisory Board, or independent members of the Board of Directors. The stock options were awarded as
partial compensation for those individuals through December 31, 2015. The stock options vested 50% on June 30, 2015 (at issuance),
25% on September 30, 2015 and 25% on December 31, 2015, and will expire on June 30, 2022. The exercise price of the stock options
was established on the grant date at $0.025 per share, as compared to the closing market price of the Companys common stock
on such date of $0.0175 per share, reflecting an exercise price premium of $0.0075 per share or 42.9%. These awards were made under
the Companys 2015 Plan. The aggregate grant date fair value of these stock options calculated pursuant to the Black-Scholes
option-pricing model was $946,000. On August 18, 2015, the
Company entered into an employment agreement with Dr. James S. Manuso to be its new President and Chief Executive Officer. In connection
therewith, and in addition to other provisions, the Board of Directors of the Company awarded Dr. Manuso stock options to purchase
a total of 85,081,300 shares of common stock, of which options for 80,000,000 shares were granted pursuant to the Companys
2015 Plan and options for 5,081,300 shares were granted pursuant to the Companys 2014 Plan. The stock options vested 50%
on August 18, 2015 (at issuance), 25% on February 18, 2016, and will vest 25% on August 18, 2016, and will expire on August 18,
2025. The exercise price of the stock options was established on the grant date at $0.0197 per share, which is equal to the simple
average of the most recent four full trading weeks, weekly Volume Weighted Average Prices (VWAPs) of the Companys
common stock price immediately preceding the date of grant as reported by OTC IQ, as compared to the closing market price of the
Companys common stock on August 18, 2015 of $0.0216 per share. The aggregate grant date fair value of these stock options
calculated pursuant to the Black-Scholes option-pricing model was $1,786,707. During the three months |
