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241000
1226000
1604000
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9777000
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9777000
9715000
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5086000
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2105000
1562500
632000
17650977
18000
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3058000
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1710000
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215
215
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2105000
5013000
2150000
2100000
2100000
2100000
3058000
4200000
4200000
900000
900000
900000
1710000
1800000
1800000
10.82
30000000
0.030
6397000
16060853
7424241
1562500
5.66
3539961
1562500
50000000
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5000000
16060853
1638000
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80535000
397000
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1165000
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1161000
1644000
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9561000
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30000
8000
9561000
9364000
80018000
153000
9517000
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1562500
632000
16060853
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2100000
2900000
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1698000
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220
1000
2154000
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2100000
2100000
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1698000
8763000
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0.0119
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1.22
0
P5Y9M11D
P7Y7D
0.77
0.0022
0.0011
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0
P9M7D
P2Y4D
1159445
173916
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1333361
10403000
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4445000
GALT
GALECTIN THERAPEUTICS INC
false
Smaller Reporting Company
2013
10-Q
2013-09-30
0001133416
--12-31
Q3
17.16
<div>
<table style="TEXT-TRANSFORM: none; TEXT-INDENT: 0px; LETTER-SPACING: normal; BORDER-COLLAPSE: collapse; FONT-FAMILY: 'Times New Roman'; FONT-SIZE: 10pt; WORD-SPACING: 0px; -webkit-text-stroke-width: 0px" border="0" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td valign="top" width="4%" align="left"><b>1.</b></td>
<td valign="top" align="left"><b>Basis of Presentation</b></td>
</tr>
</table>
<p style="TEXT-TRANSFORM: none; MARGIN-TOP: 6pt; TEXT-INDENT: 13%; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman'; WHITE-SPACE: normal; MARGIN-BOTTOM: 0pt; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-stroke-width: 0px">
Galectin Therapeutics Inc. (the “Company”) is a
development-stage company that is applying its leadership in
galectin science and drug development to create new therapies for
fibrotic disease and cancer. These therapeutic candidates are based
on the Company’s targeting of galectin proteins which are key
mediators of biologic and pathologic functions. These compounds
also may have application for drugs to treat other diseases and
chronic health conditions.</p>
<p style="TEXT-TRANSFORM: none; MARGIN-TOP: 12pt; TEXT-INDENT: 13%; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman'; WHITE-SPACE: normal; MARGIN-BOTTOM: 0pt; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-stroke-width: 0px">
The unaudited condensed consolidated financial statements as
reported in this Quarterly Report on Form 10-Q reflect all
adjustments which are, in the opinion of management, necessary to
present fairly the financial position of the Company as of
September 30, 2013 and the results of its operations for the
three and nine months ended September 30, 2013 and 2012 and
the cumulative period from inception (July 10, 2000) through
September 30, 2013 and its cash flows for the nine months
ended September 30, 2013 and 2012, and for the cumulative
period from inception (July 10, 2000) to September 30, 2013.
Such adjustments, other than nonrecurring adjustments that have
been separately disclosed, are of a normal, recurring nature. The
Company considers events or transactions that occur after the
balance sheet date but before the financial statements are issued
to provide additional evidence relative to certain estimates or to
identify matters that require additional disclosure. Subsequent
events have been evaluated through the date these financial
statements are available to be issued. The results for interim
periods are not necessarily indicative of results which may be
expected for any other interim period or for the full year. The
unaudited condensed consolidated financial statements of the
Company should be read in conjunction with its Annual Report on
Form 10-K for the year ended December 31, 2012.</p>
<p style="TEXT-TRANSFORM: none; MARGIN-TOP: 12pt; TEXT-INDENT: 13%; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman'; WHITE-SPACE: normal; MARGIN-BOTTOM: 0pt; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-stroke-width: 0px">
The Company has operated at a loss since its inception and has had
no significant revenues. The Company anticipates that losses will
continue for the foreseeable future as is develops its therapeutic
candidates. At September 30, 2013, the Company had $9,715,000
of unrestricted cash and cash equivalents available to fund future
operations. Subsequent to September 30, 2013, the Company
received $1,580,600 from the exercise of warrants and stock options
for 556,667 shares of common stock. Additionally subsequent to
September 30, 2013, the Company had issued 50,643 shares of its
common stock through its At Market issuance program (see Note 9) at
an average price of $10.82 per share resulting in net proceeds of
approximately $531,000. The Company believes that with the cash on
hand at September 30, 2013 and the cash received subsequent to
quarter end, there is sufficient cash to fund operations into the
third quarter of 2014. The Company’s ability to fund
operations after its current cash resources are exhausted depends
on its ability to obtain additional financing or achieve profitable
operations, as to which no assurances can be given. The Company has
developed plans, including cost containment efforts in the event
that such financing cannot be realized by the Company. Accordingly,
based on the forecasts and estimates underlying the Company’s
current operating plan, the financial statements do not currently
include any adjustments that might be necessary if the Company is
unable to continue as a going concern.</p>
<p style="TEXT-TRANSFORM: none; MARGIN-TOP: 12pt; TEXT-INDENT: 13%; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman'; WHITE-SPACE: normal; MARGIN-BOTTOM: 0pt; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-stroke-width: 0px">
As shown in the condensed consolidated financial statements, the
Company incurred cumulative net losses applicable to common
stockholders of $99.1 million for the cumulative period from
inception (July 10, 2000) through September 30, 2013. The
Company’s net losses have resulted principally from costs
associated with (i) research and development expenses,
including clinical trial costs, (ii) general and
administrative activities and (iii) the Company’s
financing transactions including interest, dividend payments, and
the costs related to fair value accounting for the Company’s
convertible debt instruments. As a result of planned expenditures
for future research, discovery, development and commercialization
activities and potential legal cost to protect its intellectual
property, the Company expects to incur additional losses and use
additional cash in its operations for the foreseeable future.
Through September 30, 2013, the Company had raised a net total
of $74.9 million in capital through sale and issuance of common
stock, common stock purchase warrants, convertible preferred stock
and debt securities in public and private offerings. From inception
(July 10, 2000) through September 30, 2013, the Company used
cash of $64.4 million in its operations.</p>
<p style="TEXT-TRANSFORM: none; MARGIN-TOP: 12pt; TEXT-INDENT: 13%; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman'; WHITE-SPACE: normal; MARGIN-BOTTOM: 0pt; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-stroke-width: 0px">
The Company was founded in July 2000, was incorporated in the State
of Nevada in January 2001 under the name
“Pro-Pharmaceuticals, Inc.,” and changed its name to
“Galectin Therapeutics Inc.” on May 26,
2011. On March 23, 2012, the Company began trading
on The NASDAQ Capital Market under the symbol GALT. Immediately
prior to March 23, 2012, the Company was traded on the
Over-the Counter Bulletin Board (“OTCBB”) under the
symbol GALT.OB.</p>
<p style="TEXT-TRANSFORM: none; MARGIN-TOP: 12pt; TEXT-INDENT: 13%; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman'; WHITE-SPACE: normal; MARGIN-BOTTOM: 0pt; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-stroke-width: 0px">
The Company is subject to a number of risks similar to those of
other development-stage companies, including dependence on key
individuals, uncertainty of product development and generation of
revenues, dependence on outside sources of capital, risks
associated with clinical trials of products, dependence on
third-party collaborators for research operations, need for
regulatory approval of products, risks associated with protection
of intellectual property, and competition with larger,
better-capitalized companies. Successful completion of the
Company’s development program and, ultimately, the attainment
of profitable operations is dependent upon future events, including
obtaining adequate financing to fulfill its development activities
and achieving a level of revenues adequate to support the
Company’s cost structure. There are no assurances that the
Company will be able to obtain additional financing on favorable
terms, or at all, or successfully market its products.</p>
</div>
<div>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 13%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Dilutive shares which could exist pursuant to the exercise of
outstanding stock instruments and which were not included in the
calculation because their affect would have been anti-dilutive are
as follows:</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="76%" align="center">
<tr>
<td width="64%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">September 30, 2013<br />
(shares)</td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">September 30, 2012<br />
(shares)</td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Warrants to purchase shares of common stock</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6,548,029</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7,424,241</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Options to purchase shares of common stock</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,507,005</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,541,630</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Shares of common stock issuable upon conversion of preferred
stock</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,618,772</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,627,110</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top"></td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">12,673,806</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">13,592,981</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
0.0117
<div>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 13%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The following table summarizes the stock option activity in the
Company’s equity incentive plans, including non-plan grants
to Company executives, from December 31, 2012
through September 30, 2013:</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="76%" align="center">
<tr>
<td width="72%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Shares</td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Weighted Average<br />
Exercise Price</td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Outstanding, December 31, 2012</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,539,961</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5.66</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
Granted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">425,426</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3.89</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
Exercised</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(156,349</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1.69</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
Options forfeited/cancelled</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(302,041</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">17.16</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Outstanding, September 30, 2013</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,507,005</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4.59</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
</div>
1.15
3.89
<div>
<table style="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="4%" valign="top" align="left"><b>5.</b></td>
<td align="left" valign="top"><b>Fair Value of Financial
Instruments</b></td>
</tr>
</table>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:13%; font-size:10pt; font-family:Times New Roman">
The Company has certain financial assets and liabilities recorded
at fair value. Fair values determined by Level 1 inputs utilize
observable data such as quoted prices in active markets. Fair
values determined by Level 2 inputs utilize data points other than
quoted prices in active markets that are observable either directly
or indirectly. Fair values determined by Level 3 inputs utilize
unobservable data points in which there is little or no market
data, which require the reporting entity to develop its own
assumptions. The carrying amounts reflected in the consolidated
balance sheets for cash equivalents, accounts payable and accrued
expenses approximates their carrying value due to their short-term
nature. Included in cash and cash equivalents, as of
September 30, 2013 and December 31, 2012, the Company had
$0 and $583,000, respectively invested in money market funds which
had calculated net asset values and were therefore classified as
Level 2. There were no level 3 assets held at fair value at
September 30, 2013 or December 31, 2012.</p>
</div>
P5Y3M18D
<div>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:13%; font-size:10pt; font-family:Times New Roman">
Accrued expenses consist of the following:</p>
<p style="font-size:12pt;margin-top:0pt;margin-bottom:0pt">
 </p>
<table cellspacing="0" cellpadding="0" width="76%" border="0" style="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" align="center">
<tr>
<td width="74%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="font-family:Times New Roman; font-size:8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000">September 30,<br />
2013</td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000">December 31,<br />
2012</td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family:Times New Roman; font-size:8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="6" align="center">(in thousands)</td>
<td valign="bottom"> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Legal and accounting fees</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">115</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">109</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Accrued compensation</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">57</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">42</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Severance agreement (Note 8)</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,000</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,000</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Other</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">54</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">10</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Total</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,226</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,161</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<table style="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="4%" valign="top" align="left"><b>2.</b></td>
<td align="left" valign="top"><b>Accrued Expenses</b></td>
</tr>
</table>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:13%; font-size:10pt; font-family:Times New Roman">
Accrued expenses consist of the following:</p>
<p style="font-size:12pt;margin-top:0pt;margin-bottom:0pt">
 </p>
<table cellspacing="0" cellpadding="0" width="76%" border="0" style="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" align="center">
<tr>
<td width="74%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="font-family:Times New Roman; font-size:8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000">September 30,<br />
2013</td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000">December 31,<br />
2012</td>
<td valign="bottom"> </td>
</tr>
<tr style="font-family:Times New Roman; font-size:8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="6" align="center">(in thousands)</td>
<td valign="bottom"> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Legal and accounting fees</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">115</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">109</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Accrued compensation</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">57</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">42</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Severance agreement (Note 8)</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,000</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,000</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Other</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">54</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">10</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:1.00px solid #000000"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Total</p>
</td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,226</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"><font style="font-size:8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,161</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr style="font-size:1px;">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td valign="bottom">
<p style="border-top:3.00px double #000000"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
16438000
<div>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td valign="top" width="4%" align="left"><b>4.</b></td>
<td valign="top" align="left"><b>Common Stock Warrants</b></td>
</tr>
</table>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 13%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The following table summarizes the common stock warrant activity
from December 31, 2012 through September 30, 2013:</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="76%" align="center">
<tr>
<td width="72%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Shares</td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Weighted Average<br />
Exercise Price</td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Outstanding, December 31, 2012</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7,424,241</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3.71</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
Granted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,000</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2.65</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
Exercised</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(831,212</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4.17</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
Forfeited/cancelled</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(50,000</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3.00</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Outstanding, September 30, 2013</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6,548,029</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3.65</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<i>Warrants Modification</i></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 4%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
On May 6, 2013, the Company modified the terms of the
Class A-2 and Class B warrants that were originally issued to
the 10X Fund with the Series B Preferred Stock offering. The Class
B warrants were modified to allow for the cashless exercise of all
4,000,000 outstanding Class B warrants. Previously, only half of
the Class B warrants allowed for cashless exercise. The
Class A-2 warrants for the purchase of 1,000,000 shares of
common and all of the Class B warrants had their exercisable life
extended by an additional five years. In exchange for these
modifications, the 10X Fund agreed to a future amendment of the
Company’s Series B certificate of designation to remove the
redemption provision such that the Series B Preferred Stock will no
longer be redeemable, if and when the Company will no longer be
required to issue Dr. Platt a promissory note as may currently
be required under the separation agreement (see Note
8). Should the Company amend their Series B certificate of
designation in the future as described above, the Company will be
required at that time to evaluate whether such amendment is to be
accounted for as a modification or an extinguishment of the
Company’s Series B Preferred Stock. The Company has
accounted for the modified terms of the Class A-2 and Class B
warrants pursuant to ASC 718, Stock Compensation, whereby the
Company has recognized a charge for the change in fair value of the
warrants immediately before and immediately after the
modification. For the three and six month period ended
June 30, 2013, the Company recognized a charge of $8,763,000
related to the extension of the 5,000,000 warrants. The following
assumptions were used to value the extension of the warrants
immediately before and immediately after the modification: a)
immediately before the modification—an expected life range of
0.77 to 2.01 years, volatility range of 77% to 96%, risk free
interest rate range of 0.11% to 0.22% and zero dividends and; b)
immediately following the modification—an expected life range
of 5.78 to 7.02 years, volatility range of 113% to 122%, risk free
interest rate range of 0.74% to 1.19% and zero dividends.</p>
<p style="MARGIN-TOP: 18pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
<i>Consultant Warrants</i></p>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 13%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
In January 2013, the Company entered into an agreement with a
consultant that provided for the grant of warrants for the purchase
of 5,000 shares of common stock at an exercise price of $2.65 per
share. The following assumptions were used to value the warrants:
an expected life of 3 years, volatility of 87%, risk free interest
rate of 0.42% and zero dividends. The Company recognized an expense
of $7,000 related to these warrants at the time of the grant as
they were vested at issuance. The warrants were exercised in
September 2013.</p>
</div>
3.17
0.00
-5838000
<div>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td valign="top" width="4%" align="left"><b>6.</b></td>
<td valign="top" align="left"><b>Loss Per Share</b></td>
</tr>
</table>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 13%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Basic net loss per common share is computed by dividing the net
loss available to common stockholders by the weighted average
number of common shares outstanding during the period. Diluted net
loss per common share is computed by dividing the net loss
available to common stockholders by the weighted average number of
common shares and other potential common shares then outstanding.
The computation of diluted net loss per share does not assume the
issuance of common shares that have an anti-dilutive effect on net
loss per share. Dilutive shares which could exist pursuant to the
exercise of outstanding stock instruments and which were not
included in the calculation because their affect would have been
anti-dilutive are as follows:</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="76%" align="center">
<tr>
<td width="64%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">September 30, 2013<br />
(shares)</td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">September 30, 2012<br />
(shares)</td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Warrants to purchase shares of common stock</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6,548,029</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7,424,241</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Options to purchase shares of common stock</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,507,005</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,541,630</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Shares of common stock issuable upon conversion of preferred
stock</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,618,772</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,627,110</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top"></td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">12,673,806</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">13,592,981</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
156349
302041
12673806
<div>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 13%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Following is the stock-based compensation expense related to common
stock options, common stock, restricted common stock and common
stock warrants:</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt" border="0" cellspacing="0" cellpadding="0" width="92%" align="center">
<tr>
<td width="73%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center">Three Months Ended<br />
September 30,</td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center">Nine Months Ended<br />
September 30,</td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center">2013</td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center">2012</td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center">2013</td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center">2012</td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="14" align="center">(in thousands)</td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Research and development</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">335</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">248</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">865</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">756</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
General and administrative</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,473</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">571</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,411</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,414</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
Total stock-based compensation expense</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,808</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">819</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,276</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,170</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:13%; font-size:10pt; font-family:Times New Roman">
The fair value of all other options granted is determined using the
Black-Scholes option-pricing model. The following weighted average
assumptions were used:</p>
<p style="font-size:12pt;margin-top:0pt;margin-bottom:0pt">
 </p>
<table cellspacing="0" cellpadding="0" width="76%" border="0" style="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" align="center">
<tr>
<td width="66%"></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="font-family:Times New Roman; font-size:8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" style="border-bottom:1.00pt solid #000000">
<p style="font-size:12pt;margin-top:0pt;margin-bottom:0pt">
 </p>
<p style="font-size:12pt;margin-top:0pt;margin-bottom:0pt">
 </p>
<p style="margin-top:0pt; margin-bottom:1pt; font-size:8pt; font-family:Times New Roman" align="center">Nine Months Ended<br />
September 30,</p>
</td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" colspan="2" rowspan="2" align="center" style="border-bottom:1.00pt solid #000000">Cumulative<br />
Period from<br />
Inception<br />
(July 10, 2000) to<br />
September 30,<br />
2013</td>
<td valign="bottom" rowspan="2"> </td>
</tr>
<tr style="font-family:Times New Roman; font-size:8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center" style="border-bottom:1.00pt solid #000000">2013</td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Risk-free interest rate</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1.17</td>
<td nowrap="nowrap" valign="bottom">% </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1.75</td>
<td nowrap="nowrap" valign="bottom">% </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Expected life of the options</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5.3 years</td>
<td nowrap="nowrap" valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5.2 years</td>
<td nowrap="nowrap" valign="bottom">  </td>
</tr>
<tr bgcolor="#CCEEFF" style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Expected volatility of the underlying stock</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">115</td>
<td nowrap="nowrap" valign="bottom">% </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">119</td>
<td nowrap="nowrap" valign="bottom">% </td>
</tr>
<tr style="font-family:Times New Roman; font-size:10pt">
<td valign="top">
<p style="margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">
Expected dividend rate</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">0</td>
<td nowrap="nowrap" valign="bottom">% </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">0</td>
<td nowrap="nowrap" valign="bottom">% </td>
</tr>
</table>
</div>
-1.15
1.69
425426
<div>
<table style="TEXT-TRANSFORM: none; TEXT-INDENT: 0px; LETTER-SPACING: normal; BORDER-COLLAPSE: collapse; FONT-FAMILY: 'Times New Roman'; FONT-SIZE: 10pt; WORD-SPACING: 0px; -webkit-text-stroke-width: 0px" border="0" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td valign="top" width="4%" align="left"><b>9.</b></td>
<td valign="top" align="left"><b>Subsequent Events</b></td>
</tr>
</table>
<p style="TEXT-TRANSFORM: none; MARGIN-TOP: 6pt; TEXT-INDENT: 8%; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman'; WHITE-SPACE: normal; MARGIN-BOTTOM: 0pt; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-stroke-width: 0px">
On October 16, 2013 and November 1, 2013, the 10X Fund
exercised 300,000 and 200,000 respectively, Class A-2 stock
purchase warrants at $3.00 per share for total proceeds to the
Company of $1,500,000.</p>
<p style="TEXT-TRANSFORM: none; MARGIN-TOP: 12pt; TEXT-INDENT: 8%; LETTER-SPACING: normal; FONT: 10pt 'Times New Roman'; WHITE-SPACE: normal; MARGIN-BOTTOM: 0pt; COLOR: rgb(0,0,0); WORD-SPACING: 0px; -webkit-text-stroke-width: 0px">
On October 25, 2013, the Company entered into an At Market
Issuance Sales Agreement (the “At Market Agreement”)
with a sales agent under which the Company may issue and sell
shares of its common stock having an aggregate offering price of up
to $30.0 million from time to time through the sales agent. Sales
of the Company’s common stock through the sales agent, if
any, will be made by any method that is deemed an “at the
market” offering as defined by the U.S. Securities and
Exchange Commission. The Company will pay to the sales agent a
commission rate equal to 3.0% of the gross proceeds from the sale
of any shares of common stock sold through the sales agent under
the At Market Agreement. Subsequent to September 30, 2013, the
Company had issued 50,643 shares of its common stock through its At
Market issuance program at an average price of $10.82 per share
resulting in net proceeds of approximately $531,000.</p>
</div>
P4Y2M12D
<div>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="100%">
<tr>
<td valign="top" width="4%" align="left"><b>3.</b></td>
<td valign="top" align="left"><b>Stock-Based Compensation</b></td>
</tr>
</table>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 13%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
Following is the stock-based compensation expense related to common
stock options, common stock, restricted common stock and common
stock warrants:</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt" border="0" cellspacing="0" cellpadding="0" width="92%" align="center">
<tr>
<td width="73%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center">Three Months Ended<br />
September 30,</td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center">Nine Months Ended<br />
September 30,</td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center">2013</td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center">2012</td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center">2013</td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="2" align="center">2012</td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="14" align="center">(in thousands)</td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Research and development</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">335</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">248</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">865</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">756</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
General and administrative</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,473</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">571</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,411</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,414</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
Total stock-based compensation expense</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,808</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">819</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,276</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,170</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 13%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The following table summarizes the stock option activity in the
Company’s equity incentive plans, including non-plan grants
to Company executives, from December 31, 2012
through September 30, 2013:</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="76%" align="center">
<tr>
<td width="72%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Shares</td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Weighted Average<br />
Exercise Price</td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Outstanding, December 31, 2012</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,539,961</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">5.66</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
Granted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">425,426</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3.89</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
Exercised</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(156,349</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1.69</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
Options forfeited/cancelled</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(302,041</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">17.16</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Outstanding, September 30, 2013</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3,507,005</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4.59</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 13%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
As of September 30, 2013, there was $5,086,000 of unrecognized
compensation related to 1,515,137 unvested options, which is
expected to be recognized over a weighted–average period of
approximately 4.2 years. The weighted-average grant date fair value
for options granted during the three and nine months ended
September 30, 2013 was $3.55 and $3.17, respectively. The
weighted-average grant date fair value for options granted during
the three and nine months ended September 30, 2012 was $1.89
and $1.72, respectively.</p>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 13%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The fair value of all other options granted is determined using the
Black-Scholes option-pricing model. The following weighted average
assumptions were used:</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="76%" align="center">
<tr>
<td width="66%"></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2">
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<p style="MARGIN-TOP: 0pt; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 1pt; FONT-SIZE: 8pt" align="center">Nine Months Ended<br />
September 30,</p>
</td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" rowspan="2" colspan="2" align="center">Cumulative<br />
Period from<br />
Inception<br />
(July 10, 2000) to<br />
September 30,<br />
2013</td>
<td valign="bottom" rowspan="2"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">2013</td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Risk-free interest rate</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1.17</td>
<td valign="bottom" nowrap="nowrap">% </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1.75</td>
<td valign="bottom" nowrap="nowrap">% </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Expected life of the options</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5.3 years</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5.2 years</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Expected volatility of the underlying stock</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">115</td>
<td valign="bottom" nowrap="nowrap">% </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">119</td>
<td valign="bottom" nowrap="nowrap">% </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Expected dividend rate</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">0</td>
<td valign="bottom" nowrap="nowrap">% </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">0</td>
<td valign="bottom" nowrap="nowrap">% </td>
</tr>
</table>
<p style="MARGIN-TOP: 12pt; TEXT-INDENT: 13%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
On September 26, 2013, the Company modified certain vested
stock options held by a former member of the Company’s board
of directors. The individual left the board on May 23, 2013.
The modification extended the contractual period of exercise of
103,158 stock options until the end of their original terms instead
of such options expiring 3 months after service on the board ended.
As a result, the Company recorded a non-cash charge of $930,000
related to the modification in the quarter ended September 30,
2013.</p>
</div>
50000
5000
<div>
<table style="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="4%" valign="top" align="left"><b>8.</b></td>
<td align="left" valign="top"><b>Commitments, Contingencies and
Legal Proceedings</b></td>
</tr>
</table>
<p style="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<i>Agreement with CTI for Phase I Clinical Trial</i></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
On February 1, 2013, the Company entered into an Amended and
Restated Master Services Agreement (the “Agreement”)
with CTI Clinical Trial Services, Inc. and CTI Clinical Consulting
Services, Inc. (individually and collectively,
“CTI”), whereby CTI is assisting the Company in the
design, development and conduct of one or more clinical research
studies from time to time. All work performed by CTI for the
Company is being conducted pursuant to the terms of work orders
that describe the specific obligations undertaken by CTI with
respect to any particular clinical research study sponsored or
conducted by the Company. Unless otherwise terminated sooner
in accordance with the terms of the Agreement, the Agreement will
be effective until January 31, 2018.</p>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
On February 1, 2013, the Company entered into a work order
(the “Work Order”) with CTI in accordance with the
terms of the Agreement. The Work Order provides that CTI will
provide services with respect to the Company’s Phase I
Clinical Trial to evaluate the safety of the Company’s drug
GR-MD-02 in subjects with Non-Alcoholic Steatohepatitis
(“NASH”) with advanced hepatic fibrosis. CTI is
providing the following services, amongst others, with respect
to the Work Order: reviewing and providing notices regarding IND
safety reports, selecting investigators and monitors for the study,
informing investigators of new observations, monitoring the
progress of the study and reviewing ongoing investigations, keeping
certain records, inspecting the Company’s records and
reports, and disposing of any unused supply of the investigational
drug.</p>
<p style="font-size:1px;margin-top:12px;margin-bottom:0px">
 </p>
<p style="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
The Work Order provides for CTI’s anticipated involvement in
the study from February 1, 2013 until March 31,
2014. The estimated budget for the Work Order is $2,155,000,
which is subject to change as necessary, with payments made
throughout the term of the project as the work is performed. During
the three and nine months ended September 30, 2013, the
Company recognized $239,000 and $1,329,000 of expenses related to
this agreement for services performed.</p>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
The Agreement or any work order may be terminated for any reason by
any party upon ninety (90) days prior written notice to the
other party. In addition, the Agreement may be terminated by either
party immediately if the other party becomes insolvent, is
dissolved or liquidated, makes a general assignment for the benefit
of its creditors, files or has filed against it (and does not
obtain a dismissal within ninety (90) days) a petition of
bankruptcy, or has a receiver appointed for it or a substantial
part of its assets, among other reasons. Further, the Agreement or
any relevant work order may be terminated immediately by written
notice from the Company, in the following circumstances:
(1) the FDA withdraws authorization and approval to conduct a
study; or (2) the Company reasonably determines that for
medical, clinical or patient safety reasons, a study should
terminate immediately. In addition, either party may terminate the
Agreement or any work order for material breach upon thirty
(30) days’ written notice specifying the nature of the
breach, if such breach has not been substantially cured within the
thirty (30) day period.</p>
<p style="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<i>Drug Discovery Program with the University of Georgia</i></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
In February 2013, the Company established a collaborative drug
discovery program at the Complex Carbohydrate Research
Center at the University of Georgia. This program is
focused on the discovery of new carbohydrate molecules that can be
used in the therapy of diseases where galectin proteins play a
major role, including cancer and inflammatory and fibrotic
disorders. The term of the agreement is effective through
December 31, 2013, for which the Company will provide funding
of $154,000 during the period. The Company has paid $154,000
related to this program through September 30, 2013. This
agreement may be terminated by either party upon 90 days
notice.</p>
<p style="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<i>Separation Agreement</i></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:13%; font-size:10pt; font-family:Times New Roman">
In February 2009, the Company entered into a Separation Agreement
in connection with the resignation of David Platt, Ph.D., the
Company’s former Chief Executive Officer and Chairman of the
Board of Directors. The Separation Agreement provides for the
deferral of a $1.0 million separation payment due to Dr. Platt
upon the earlier occurrence of any of the following milestone
events: (i) the approval by the Food and Drug Administration
for a new drug application (“NDA”) for any drug
candidate or drug delivery candidate based on the Company’s
GM-CT-01 technology (whether or not such technology is patented),
in which case Dr. Platt is also entitled to a fully vested
10-year cashless-exercise stock option to purchase at least 83,334
shares of common stock at an exercise price not less than the fair
market value of the common stock determined as of the date of
grant; (ii) consummation of a transaction with a
pharmaceutical company expected to result in at least $10.0 million
of equity investment or $50 million of royalty revenue to the
Company, in which case Dr. Platt is also entitled to stock
options on the same terms to purchase at least 50,000 shares of
common stock; or (iii) the renewed listing of the
Company’s securities on a national securities exchange and
the achievement of a market capitalization of $100 million. Payment
upon the events (i) and (iii) may be deferred up to six
months, and if the Company has insufficient cash at the time of any
of such events, it may issue Dr. Platt a secured promissory
note for such amount. If the Company files a voluntary or
involuntary petition for bankruptcy, whether or not a milestone
event has occurred, such event shall trigger the obligation to pay
the $1.0 million with the result that Dr. Platt may assert a
claim for such obligation against the bankruptcy estate. During
2011, when it became probable that the Company could be relisted on
a national securities exchange and eventually reach a market
capitalization of $100 million, the Company recognized the $1.0
million severance payment due to Dr. Platt and it is included
in accrued expenses at September 30, 2013 and
December 31, 2012.</p>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:13%; font-size:10pt; font-family:Times New Roman">
On May 2, 2012, Dr. Platt instituted an arbitration with
the American Arbitration Association seeking the $1 million payment
based on a claim that the milestone event in the Separation
Agreement described in clause (iii) above had occurred.
Although the Company had listed its common stock on the Nasdaq
Capital Markets as of March 22, 2012, the market
capitalization since the listing had not reached $100 million when
the arbitration was heard in October 2012. On November 1,
2012, the arbitrator denied Dr. Platt’s demand in all
respects.</p>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:13%; font-size:10pt; font-family:Times New Roman">
On October 12, 2012, Dr. Platt commenced a lawsuit under
the Massachusetts Wage Act against Dr. Traber and
Mr. McGauley who in their capacities as the Company’s
Chief Executive Officer and Chief Financial Officer respectively
can be held individually liable under the Wage Act for non-payment
of wages. The lawsuit is based on the facts and issues raised in
the arbitration regarding the payment of the $1.0 million
separation payment under the Separation Agreement, and other
unspecified “wages”. The statute provides that a
successful claimant may be entitled to multiple damages, interest
and attorney’s fees. Although the Company is not a party to
the lawsuit, it plans to indemnify Dr. Traber and
Mr. McGauley consistent with its obligations under the by-laws
and applicable law, believes the lawsuit is without merit, and
intends a vigorous defense on their behalf. On April 29, 2013,
the Court allowed Dr. Traber’s and
Mr. McGauley’s motion to dismiss. Dr. Platt filed a
Notice of Appeal to appeal the Court’s order allowing the
defendants’ motion to dismiss.</p>
<p style="font-size:1px;margin-top:12px;margin-bottom:0px">
 </p>
<p style="margin-top:0pt; margin-bottom:0pt; text-indent:13%; font-size:10pt; font-family:Times New Roman">
On March 29, 2013, the Company instituted arbitration before
the American Arbitration Association, seeking to rescind or reform
the Separation Agreement discussed above. The Company claims that
Dr. Platt fraudulently induced the Company to enter into the
Separation Agreement, breached his fiduciary duty to the Company,
and was unduly enriched from his conduct. Along with removal of the
$1.0 million milestone payment under the Separation Agreement, the
Company is seeking repayment of all separation benefits paid to
Dr. Platt to date. Depending on the outcome of the
arbitration, the previously accrued $1.0 million could be reversed.
This arbitration has been scheduled for May 2014; however, the
ultimate outcome is uncertain and there is no guarantee that the
Company will be successful in this demand.</p>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:17%; font-size:10pt; font-family:Times New Roman">
On August 1, 2013, the market capitalization of the
Company’s common stock exceeded $100 million and the Company
received a letter dated October 1, 2013, demanding payment of
the $1 million. As described in the preceding paragraph, the
Company had previously instituted an arbitration against
Dr. Platt seeking to rescind the Separation Agreement,
including the milestone payment provision. The Company expects to
delay payment for at least six months under the terms of the
Separation Agreement.</p>
<p style="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<i>Series C Post Conversion Dividend Rights</i></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:13%; font-size:10pt; font-family:Times New Roman">
In January 2013, 5 shares of the Company’s Series C Super
Dividend Convertible Preferred Stock (“Series C”) were
converted into 8,475 shares of common stock (consisting of 8,334
shares of common stock for principal and 141 shares for accrued
interest at the time of the conversion) which also resulted in the
issuance of 5 Series C post-conversion dividend rights
(“Dividend Rights”). Under the terms of the Series C,
the Dividend Rights entitle the holder only to dividend payments
based on actual sales of GM-CT-01 and will not participate in the
6% dividend payable on outstanding shares of Series C following a
conversion to common stock. At September 30, 2013, there are a
total of 10 outstanding Dividend Rights which were determined to
have a de minimis value, because payment of a dividend for the
Dividend Rights is considered improbable at this time and the
Company has not recorded a liability related to the Dividend
Rights. The Company will continue to evaluate and assess the
Dividend Rights for each reporting period. At September 30,
2013, the Dividend Rights had a redemption value of $241,000.</p>
<p style="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">
<i>Other Legal Proceedings</i></p>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:13%; font-size:10pt; font-family:Times New Roman">
The Company records accruals for such contingencies to the extent
that the Company concludes that their occurrence is probable and
the related damages are estimable, except as noted above. There has
been no change in the matters reported in our Annual Report on Form
10-K for the year ended December 31, 2012.</p>
</div>
3000000
184000
11000
-18836000
-126000
-9300000
11000
-9289000
49000
3276000
5007000
6189000
40000
3276000
9000
351000
9300000
613000
3000000
-5000
4293000
45000
171000
4.17
2.65
<div>
<table style="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" border="0" cellpadding="0" cellspacing="0" width="100%">
<tr>
<td width="4%" valign="top" align="left"><b>7.</b></td>
<td align="left" valign="top"><b>Common Stock and Warrant Offering
and Reverse Split</b></td>
</tr>
</table>
<p style="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
On March 22, 2012, the Company entered into an underwriting
agreement relating to the offer and sale of 1,159,445 units (the
“Units”) of the Company. Each unit consisted of two
shares of Common Stock and one warrant to purchase one share of
Common Stock. Pursuant to the underwriting agreement, the Company
granted the underwriters a 45-day option to purchase up to an
additional 173,916 Units to cover over-allotments, which they
exercised on March 26, 2012. The public offering price for
each Unit was $9.00. Each warrant has an initial exercise price of
$5.63 per share, is exercisable upon separation of the Units and
expires on March 28, 2017.</p>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
On March 28, 2012, the Company sold and issued 1,333,361 Units
(2,666,722 shares of common stock and related $5.63 warrants to
purchase 1,333,361 shares of common stock) for gross proceeds of
$12.0 million (net cash proceeds of $10,403,000 after the
underwriting discount and offering costs). The warrants were valued
at $4,445,000 as of the issuance date of March 28, 2012, using
the closing price of $4.20, a life of 5 years, a volatility of 119%
and a risk free interest rate of 1.05%. Based upon the
Company’s analysis of the criteria contained in ASC Topic
815-40, “Derivatives and Hedging—Contracts in
Entity’s Own Equity” the Company has determined that
warrants issued in connection with this financing transaction were
not derivative liabilities and therefore, were recorded as
additional paid-in capital.</p>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
On March 28, 2012, in connection with this underwritten
financing as per the underwriting agreement, the Company issued a
total of 46,378 common stock purchase warrants to the underwriters.
These warrants expire May 2, 2016, have an exercise price of
$5.63 per share, and are exercisable beginning 1 year from
March 22, 2012 (the date of the underwriting agreement). These
warrants were valued at $143,000 as of the date of issuance (March
28, 2012), using the closing price of $4.20, life of 4.1 years,
volatility of 117% and risk free interest rate of 0.78. Based upon
the Company’s analysis of the criteria contained in ASC Topic
815-40, “Derivatives and Hedging—Contracts in
Entity’s Own Equity”, the Company has determined that
these warrants issued in connection with this financing transaction
were not derivative liabilities and therefore, were recorded as
additional paid-in capital.</p>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">
Effective as of March 23, 2012, and in connection with the
pricing of the offering of Units, the Company effected a
one-for-six reverse split of its Common Stock. Per the terms of the
reverse split, all fractional shares were rounded up.</p>
<p style="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">
On August 16, 2013, the Company issued 500,000 shares of its
common stock for proceeds of $3,000,000 to a single investor
pursuant to a private placement. There were no warrants or
placement fees associated with this transaction.</p>
</div>
831212
1329000
2018-01-31
3.00
<div>
<p style="MARGIN-TOP: 6pt; TEXT-INDENT: 13%; FONT-FAMILY: Times New Roman; MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt">
The following table summarizes the common stock warrant activity
from December 31, 2012 through September 30, 2013:</p>
<p style="MARGIN-TOP: 0pt; MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt">
 </p>
<table style="BORDER-COLLAPSE: collapse; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" border="0" cellspacing="0" cellpadding="0" width="76%" align="center">
<tr>
<td width="72%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 8pt">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Shares</td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center">Weighted Average<br />
Exercise Price</td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Outstanding, December 31, 2012</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">7,424,241</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3.71</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
Granted</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,000</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2.65</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
Exercised</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(831,212</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">4.17</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; FONT-SIZE: 10pt">
Forfeited/cancelled</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(50,000</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">3.00</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt" bgcolor="#CCEEFF">
<td valign="top">
<p style="TEXT-INDENT: -1em; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; FONT-SIZE: 10pt">
Outstanding, September 30, 2013</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">6,548,029</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3.65</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
</table>
</div>
130000
3005000
694000
3189000
8763000
-9289000
40000
130000
8763000
94000
102000
291000
123000
2999000
184000
49000
3276000
3004000
-8763000
-127000
-149000
-291000
-123000
-5
-49000
500000
8475
156341
1000
777153
1000
23848
25038
69580
29689
-40000
-118000
-12000
-33000
-47000
2411000
865000
3507005
2618772
6548029
14851000
1.72
-5749000
13592981
-0.55
2000
-10000
200000
18000
-8173000
-68000
-7517000
218000
-7299000
3992000
10403000
2170000
5000
4662000
7517000
702000
10403000
8000
3525000
-693000
172000
26000
4445000
782000
1414000
756000
3541630
2627110
7424241
83334
50000000
P6M
P10Y
50643
531000
300000
1000000
0.06
5
5
8475
8334
141
0.0042
0.87
P3Y
0.00
7000
3000000
1000000
P90D
P30D
P90D
1500000
200000
P5Y
P5Y
0.0175
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P5Y2M12D
0.00
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1641000
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431000
12243000
404000
691000
829000
107000
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30000
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2665000
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171000
9000
52043000
74941000
4279000
15650000
564000
9715000
83946000
4848000
10621000
351000
4451000
42093000
1000
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31903000
1671000
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4216000
329000
9482000
4849000
14482000
503000
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8763000
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1691000
3935000
1548000
1580600
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1.13
0.0119
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1.22
0
P5Y9M11D
P7Y7D
0.77
0.0022
0.0011
0.96
0
P9M7D
P2Y4D
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200000
7000
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207000
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1487000
819000
2896000
238000
1409000
58000
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248000
16988000
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3000
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3000
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2353000
1808000
3545000
123000
1192000
58000
239000
930000
P3M
1473000
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