8.	Stockholders’ Equity

Series B Convertible Preferred Stock

As of

June 30, 2017,

there are

100

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

may

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

$0.35,

285,714

shares of our common stock.

During the

six

months ended

June

30,

2017,

there were

conversions or other transactions involving our Series B Preferred Stock.

Series C Convertible Preferred Stock

As of

June 30, 2017,

there are

2,810

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

may

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

$0.015,

187,349,733

shares of our common stock.

May 2017,

in connection with the issuance of our Series D Convertible Preferred Stock discussed below, the conversion price of our Series C Preferred Stock was automatically reduced from

$0.05

per share to

$0.015

per share. During the

six

months ended

June 30, 2017,

we issued an aggregate of

3,862,000

shares of our common stock related to conversion of

shares our Series C Preferred Stock.

Series D Convertible Preferred Stock

May 2017,

we issued

1,000

shares of our Series D Convertible Preferred Stock,

$1,000

stated value (“Series D Preferred Stock”), for gross proceeds of

$1.0

million. Net proceeds, after deduction of certain expenses, were

$980,000

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

voting rights, and is

not

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

$0.015

per share.

The Series D Preferred Shares contains price adjustment provisions, which

may,

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

We assessed the Series D Preferred Stock under ASC Topic

480,

“

Distinguishing Liabilities from Equity

” (“ASC

480”

), ASC Topic

815,

“

Derivatives and Hedging

” (“ASC

815”

), and ASC Topic

470,

“

Debt

” (“ASC

470”

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

815

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

not

require bifurcation and separate recognition under ASC

815.

We determined there to be a beneficial conversion feature (“BCF”) requiring recognition at its intrinsic value. Since the conversion option of the preferred stock was immediately exercisable, the amount allocated to the BCF was immediately accreted to preferred dividends, resulting in an increase in the carrying value of the preferred stock.

Common Stock Transactions

During

May

and

June 2017,

we issued

3,862,000

shares of our common stock pursuant to the conversion of

shares of our Series C Preferred Stock.

During

March 2017,

we issued

983,334

shares of our common stock related to the exercise of stock purchase warrants, resulting in net proceeds of

$49,167.

During

April 2017,

we issued

2,500,000

shares of our common stock related to the exercise of stock purchase warrants, resulting in net proceeds of

$100,000.

During

May 2017,

we issued

333,333

shares of our common stock related to the exercise of stock purchase warrants, resulting in net proceeds of

$5,000.

Stock Options

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

six

months ended

June 30, 2017:

	Number of Shares			Weighted Average Exercise Price
Outstanding at December 31, 2016		3,499,475		$	1.21
Granted		--			--
Exercised		--			--
Forfeited or expired		(115,200	)		17.75
Outstanding at June 30, 2017		3,384,275		$	0.64
Exercisable at June 30, 2017		1,135,494		$	1.77

Stock Purchase Warrants

The following table presents a summary of stock purchase warrant transactions during the

six

months ended

June

30,

2017:

	Number of Shares			Weighted Average Exercise Price
Outstanding at December 31, 2016		32,751,578		$	0.07
Granted		--			--
Exercised		(3,816,667	)		0.02
Forfeited or expired		(1,112,001	)		0.57
Outstanding at June 30, 2017		27,822,910		$	0.02
Exercisable at June 30, 2017		27,822,910		$	0.02

Stock-Based Compensation Expense

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

$14,522

and

$29,102

for the

three

-month and

six

-month periods ended

June 30, 2017,

respectively, as compared to

$13,686

and

$27,372

for the

three

-month and

six

-month periods ended

June 30, 2016,

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

June 30, 2017,

there was

$102,882

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

2.1

years.