Stockholders’ Equity

Series B Convertible Preferred Stock

As of

June 30, 2018,

there are

100

shares of our Series B Convertible Preferred Stock (“Series B Preferred Stock”) outstanding. The Series B Preferred Stock

may

be converted at any time at the option of the holder into shares of our common stock at a conversion price of

$0.35

per share, or

285,714

shares. During the

six

months ended

June

30,

2018,

there were

conversions or other transactions involving our Series B Preferred Stock.

Series C Convertible Preferred Stock

As of

June 30, 2018,

there are

2,570

shares of our Series C Convertible Preferred Stock (“Series C Preferred Stock”) outstanding. The Series C Preferred Stock

may

be converted at any time at the option of the holder into shares of our common stock at a conversion price of

$0.015

per share, or

171,349,733

shares. During the

six

months ended

June

30,

2018,

there were

conversions or other transactions involving our Series C Preferred Stock.

Series D Convertible Preferred Stock

As of

June 30, 2018,

there are

205

shares of our Series D Convertible Preferred Stock (“Series D Preferred Stock”) outstanding. The Series D Preferred Stock

may

be converted at any time at the option of the holder into shares of our common stock at a conversion price of

$0.015

per share, or

13,666,666

shares. During the

six

months ended

June

30,

2018,

795

shares our Series D Preferred Stock were converted into

53,000,000

shares of our common stock.

Series E Convertible Preferred Stock

March 2018,

we issued

600

shares of our Series E Convertible Preferred Stock,

$1,000

stated value (“Series E Preferred Stock”), for net proceeds, after deduction of certain expenses, of

$590,000.

Each share of Series E Preferred Stock is entitled to a liquidation preference equal to the initial purchase price, has

voting rights, and is

not

entitled to a dividend. The Series E Preferred Stock is convertible at any time at the option of the holders into shares of our common stock, with an initial conversion price of

$0.08

per share. The Series E Preferred Shares contains price adjustment provisions, which

may,

under certain circumstances, reduce the conversion price on future dates according to a formula based on the then-current market price for our common stock.

We assessed the Series E Preferred Stock under ASC Topic

480,

“

Distinguishing Liabilities from Equity

” (“ASC

480”

), ASC Topic

815,

“

Derivatives and Hedging

” (“ASC

815”

), and ASC Topic

470,

“

Debt

” (“ASC

470”

). The preferred stock contains an embedded feature allowing an optional conversion by the holder into common stock which meets the definition of a derivative. However, we determined that the preferred stock is an “equity host” (as described by ASC

815

) for purposes of assessing the embedded derivative for potential bifurcation and that the optional conversion feature is clearly and closely associated to the preferred stock host; therefore, the embedded derivative does

not

require bifurcation and separate recognition under ASC

815.

During the

six

months ended

June

30,

2018,

there were

conversions or other transactions involving our Series E Preferred Stock

Common Stock Transactions

As discussed above, during the

six

months ended

June 30, 2018,

we issued

53,000,000

shares of our common stock pursuant to the conversion of

795

shares of our Series D Preferred Stock.

During the

six

months ended

June 30, 2018,

we issued

5,000,000

shares of our common stock in connection with our entering into a financial advisory and investment banking agreement (see “Stock-Based Compensation Expense” below).

Stock Options

The following table presents a summary of our stock option transactions during the

six

months ended

June 30, 2018:

	Number of Shares			Weighted Average Exercise Price
Outstanding at December 31, 2017		7,024,275		$	0.29
Granted		--			--
Exercised		--			--
Forfeited or expired		(138,000	)		3.01
Outstanding at June 30, 2018		6,886,275		$	0.24
Exercisable at June 30, 2018		1,890,618		$	0.71

Stock Purchase Warrants

February 28, 2018,

in connection with issuance of the note payable discussed in Note

we issued a

five

-year warrant to purchase

178,571

shares of our common stock at a purchase price of

$0.042

per share. We had

other stock purchase warrants outstanding at

June 30, 2018.

Stock-Based Compensation Expense

Stock-based compensation expense related to our stock option plans was

$23,221

and

$47,199

for the

three

-month and

six

-month periods ended

June 30, 2018,

respectively, as compared to

$14,522

and

$29,102

for the

three

-month and

six

-month periods ended

June 30, 2017,

respectively. Stock-based compensation expense for stock options is recognized on a straight-line basis over the requisite service period for the award and is allocated to research and development expense or general and administrative expense based upon the related employee classification. As of

June 30, 2018,

there was

$168,503

of unrecognized compensation expense related to stock options, which we expect to recognize over a weighted average period of

2.1

years.

Additionally, during the

three

-month and

six

-month periods ended

June 30, 2018

we recorded stock-based compensation expense of

$57,143

and

$85,714,

respectively, associated with common stock issued for financial advisory services. As of

June 30, 2018,

there was

$114,286

of unrecognized stock-based compensation expense associated with this arrangement, which we expect to recognize during the remainder of

2018.