Note 6 - Stockholders' Equity

9 Months Ended

Sep. 30, 2014

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

6.                Stockholders’ Equity

Preferred Stock Transactions

During the nine months ended September 30, 2014, we issued an aggregate of 202,857 and 1,500,000 shares of our common stock related to conversions of our Series A and Series B Convertible Preferred Stock, respectively. As of September 30, 2014, there are no shares of our Series A Convertible Preferred Stock outstanding, and 1,125 shares of our Series B Convertible Preferred Stock outstanding, convertible into 3,214,286 shares of our common stock.

Common Stock Transactions

In addition to common stock issued pursuant to the conversion of our Series A and Series B Convertible Preferred Stock described above, in July 2014, we issued 250,000 shares of our common stock for certain consulting services from a third party and recorded stock-based compensation expense of $50,000 related to the issuance.

Stock Options

We maintain a stock option plan that provides the Board of Directors broad discretion in creating equity incentives for employees, officers, directors and consultants.

The following table presents a summary of stock option transactions during the nine months ended September 30, 2014:

	Number of Shares			Weighted Average Exercise Price
Outstanding at December 31, 2013		1,197,044		$	3.79
Granted		7,500			0.29
Exercised		--			--
Forfeited or expired		(231,444	)		1.89
Outstanding at September 30, 2014		973,100		$	4.22
Exercisable at September 30, 2014		616,594		$	6.30

Stock Purchase Warrants

We have previously issued stock purchase warrants in connection with financing transactions and also in exchange for services from consultants and others. As of September 30, 2014, there are 8,284,826 stock purchase warrants outstanding, with a weighted average exercise price of $0.54. During October 2014, 3,176,000 of these warrants were exercised for cash (see Note 10).

Effective September 30, 2014, we reduced the exercise price of certain warrants to purchase an aggregate of 818,376 shares of our common stock from $16.50 to $1.00 per share, and extended the expiration date of the warrants from December 31, 2014 to December 31, 2016. We recorded general and administrative expense of $39,711 associated with these modifications, all of which was recognized during the three month period ended September 30, 2014.

Stock-Based Compensation Expense

During the three month and nine month periods ended September 30, 2014, we recorded share-based compensation expense related to stock options of $24,573 and $75,927, respectively, as compared to $33,348 and $116,600 for the three month and nine month periods ended September 30, 2013, respectively. Share-based compensation expense is recognized on a straight-line basis over the requisite service period for the award and is allocated to research and development expense or general and administrative expense based upon the related employee classification. As of September 30, 2014, there was $106,939 of unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of 1.7 years.

As discussed under “Stock Purchase Warrants” above, during the three month and nine month periods ended September 30, 2014, we recorded general and administrative expense associated with modifications to certain stock purchase warrants of $39,711. During the comparable periods of 2013, we recorded general and administrative expense associated with modifications to then-outstanding stock purchase warrants of $-0- and $238,169, respectively

.

As discussed under “Common Stock Transactions” above, during the three month and nine month periods ended September 30, 2014, we recorded general and administrative expense associated with the issuance of 250,000 shares of our common stock for consulting services of $50,000

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Common Stock Reserved

A summary of our common stock reserved for future issuance is as follows as of September 30, 2014:

Series B Convertible Preferred Stock (see Note 10)	3,214,286
Common Stock Purchase Warrants (see Note 10)	8,284,826
Equity Incentive Plans	1,197,529
Total	12,696,641