NOTE 5 - STOCKHOLDERS' EQUITY

Preferred Stock

Our amended and restated certificate of incorporation authorizes the issuance of up to 10,000,000 shares of preferred stock, $0.001 par value, with rights senior to those of our common stock, issuable in one or more series. Upon issuance, the Company can determine the rights, preferences, privileges and restrictions thereof. These rights, preferences and privileges could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting any series or the designation of such series, any or all of which may be greater than the rights of common stock.

Common Stock

Our amended and restated certificate of incorporation authorizes the issuance of up to 150,000,000 shares of $0.001 par value common stock. At the annual shareholder meeting on June 6, 2014, an amendment to the Company’s Certificate of Incorporation to decrease its authorized share capital by 350,000,000 shares from 500,000,000 to 150,000,000 was approved.

On March 11, 2014, we announced the pricing of an underwritten sale of 2,702,809 shares of our Common Stock at a price of $6.71 per share for gross proceeds of approximately $18.1 million. Total net proceeds from this offering were approximately $16.8 million, net of underwriting discounts and offering expenses of approximately $1.3 million. The shares were sold under a shelf registration statement on Form S-3 (File No. 333-189015) that was previously filed and declared effective by the SEC on June 17, 2013.

We currently have one shelf registration statement on Form S-3 filed and declared effective by the SEC (File No. 333-189015). Subsequent to the March 2014 offering, there remains available under this shelf registration statement up to approximately $117 million of Common Stock. We may offer the securities under our shelf registration statement from time to time in response to market conditions or other circumstances if we believe such a plan of financing is in the best interests of our stockholders. We believe that this shelf registration statement provides us with the flexibility to raise additional capital to finance our operations as needed.

Equity Incentive Plans

Shares available for the issuance of stock options or other stock-based awards under our stock option and incentive plans were 810,103 shares at June 30, 2014.

Stock Options

The following table summarizes stock option activity for the six months ended June 30, 2014:

	Number of shares	Weighted- average exercise price		Weighted- average Contractual Term	Aggregate Intrinsic Value
				(in years)
Outstanding at December 31, 2013	46,591	$	46.37	8.50	$	—
Granted	—		—
Exercised	—		—
Forfeited	—		—
Expired	(359)		4,640.63
Outstanding at June 30, 2014	46,232	$	10.70	8.07	$	229,540

Vested and expected to vest at June 30, 2014	37,232	$	12.22	8.07	$	184,630
Exercisable at June 30, 2014	37,232	$	12.22	8.07	$	184,630

As of June 30, 2014, the total compensation cost related to unvested time-based option awards not yet recognized was $0. This amount does not include, as of June 30, 2014, 9,000 non-employee options outstanding which are milestone-based and vest upon certain corporate milestones. Stock-based compensation will be measured and recorded if and when a milestone occurs.

Restricted Stock

Certain employees, directors and consultants have been awarded restricted stock under the 2012 Incentive Plan. The restricted stock vesting consists of milestone and time-based vesting provisions. The following table summarizes restricted share activity for the six months ended June 30, 2014:

	Number of Shares	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2013	7,034,957	$	4.60
Granted	297,690		8.14
Vested	(502,124)		6.88
Forfeited	—		—
Outstanding at June 30, 2014	6,830,523	$	4.65

Total expense associated with restricted stock grants was $11,717,774 during the six months ended June 30, 2014. As of June 30, 2014, there was approximately $6,749,000 of total unrecognized compensation cost related to unvested time based restricted stock, which is expected to be recognized over a weighted-average period of 1.5 years. The unrecognized compensation cost does not include, as of June 30, 2014, 1,663,460 shares of restricted stock outstanding which are milestone-based and vest upon certain corporate milestones; and 2,417,250 shares of restricted stock outstanding issued to non-employees. Milestone based noncash compensation expense will be measured and recorded if and when a milestone occurs.

Warrants

The following table summarizes warrant activity for the six months ended June 30, 2014:

	Warrants	Weighted- average exercise price		Aggregate Intrinsic Value
Outstanding at December 31, 2013	5,718,947	$	1.34	$	14,809,030
Issued	—		—
Exercised	(700,230)		2.29
Expired	(9,795)		20.92
Outstanding at June 30, 2014	5,008,922	$	1.17	$	41,163,640

Stock-Based Compensation

The fair value of stock options granted is estimated at the date of grant using the Black-Scholes pricing model. The expected term of options granted is derived from historical data and the expected vesting period. Expected volatility is based on the historical volatility of our common stock. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. We have assumed no expected dividend yield, as dividends have never been paid to stock or option holders and will not be paid for the foreseeable future. The Company did not grant any stock options during the six months ended June 30, 2014.

The following table summarizes stock-based compensation expense information about stock options and restricted stock for the three and six months ended June 30, 2014:

	Three months ended June 30, 2014		Six months ended June 30, 2014
Stock-based compensation expense associated with restricted stock	$	7,486,336	$	11,717,774
Stock-based compensation expense associated with option grants		252,510		252,510
	$	7,738,846	$	11,970,284