NOTE F — EQUITY

Stock Options

On May 4, 2015, the board of directors of Parent (the “Board of Directors”) further amended the Amended and Restated Equity Incentive Plan dated as of April 16, 2013 (the “Plan”) to add an additional 2,500,000 shares to the maximum aggregate number of shares of Parent common stock reserved and available for issuance under the Plan, bringing the total available from the Plan to 9,500,000 shares. This amendment was approved by the shareholders on June 12, 2015.

On May 4, 2015, the Compensation Committee of the Board of Directors granted 1,645,000 options to certain executives and key employees of the Company. The options were granted at a price of $4.78 per share and had a weighted average fair market value of $1.80 per option for a total fair market value of $2,961,000.

A summary of the stock option activity under the Company’s plans for the nine months ended September 30, 2015 is as follows:

	Number of		Weighted average
	shares		exercise price
Options outstanding at December 31, 2014		4,012,096	$	2.04
Options granted		1,756,000		4.80
Less:
Options exercised		289,125		1.61
Options canceled or expired		12,500		3.19
Options outstanding at September 30, 2015		5,466,471		2.95
Exercisable at September 30, 2015		2,686,247	$	1.52

As of September 30, 2015, there was approximately $3.2 million of unrecognized share based compensation expense related to stock options that will be recognized over a weighted-average period of approximately 1.5 years.

Stock based compensation expense recognized for stock options and restricted stock and included in the consolidated statements of operations was allocated as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Research and development expense	$	161	$	200	$	339	$	269
General and administrative expense		667		120		1,395		297
Total stock based compensation expense	$	828	$	320	$	1,734	$	566

Stock based compensation recorded in research and development relates to unvested options granted to a non-employee in connection with the licensed technology from Health Discovery Corporation.

Common Stock Warrants

A summary of the warrant activity for the nine months ended September 30, 2015 is as follows:

	Number of		Weighted average
	shares		exercise price
Warrants outstanding at December 31, 2014		650,000	$	1.48
Warrants granted		—		—
Less:
Warrants exercised		—		—
Warrants canceled or expired		—		—
Warrants outstanding at September 30, 2015		650,000	$	1.48
Exercisable at September 30, 2015		530,000	$	1.49

During the three months ended September 30, 2015 and 2014, we recorded $58,000 and $137,000 of warrant compensation expense, respectively. During the nine months ended September 30, 2015 and 2014, we recorded $173,000 and $172,000 of warrant compensation expense, respectively. Warrant expense for the periods presented is recorded in research and development as the expense relates to unvested performance based warrants granted to a non-employee in connection with the licensed technology from Health Discovery Corporation.

Restricted Stock Awards

On April 16, 2015 the Company granted four directors of Parent each 2,080 shares of restricted stock. Such restricted stock will vest ratably over each of the next four quarters so long as the director still serves as a member of the Board of Directors. The fair market value of each grant of restricted stock on the award date was deemed to be $10,025 or $4.82 per share, which was the closing price of Parent’s common stock on the day before the grant was approved by the compensation committee of the Board of Directors.

On June 16, 2015 the Company granted two newly elected directors of Parent each 1,560 shares of restricted stock. Such restricted stock will vest ratably over each of the next three quarters so long as the director still serves as a member of the Board of Directors. The fair market value of each grant of restricted stock on the award date was deemed to be $9,079 or $5.82 per share, which was the closing price of Parent’s common stock on the day before the grant was approved by the compensation committee of the Board of Directors.