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<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>DESCRIPTION
OF BUSINESS</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">We
are a biopharmaceutical company focused on the acquisition, development and commercialization of novel treatments for B-cell malignancies
and autoimmune diseases. Currently, the Company is developing two therapies targeting hematologic malignancies. TG-1101 (ublituximab)
is a novel, glycoengineered monoclonal antibody that targets a specific and unique epitope on the CD20 antigen found on mature
B-lymphocytes. We are also developing TGR-1202, an orally available PI3K delta inhibitor. The delta isoform of PI3K is strongly
expressed in cells of hematopoietic origin and is believed to be important in the proliferation and survival of B-lymphocytes.
Both TG-1101 and TGR-1202 are in clinical development for patients with hematologic malignancies. The Company also has pre-clinical
programs to develop IRAK4 (interleukin-1 receptor-associated kinase 4) inhibitors, BET (Bromodomain and Extra Terminal) inhibitors,
and anti-PD-L1 and anti-GITR antibodies.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">We
also actively evaluate complementary products, technologies and companies for in-licensing, partnership, acquisition and/or investment
opportunities. To date, we have not received approval for the sale of any of our drug candidates in any market and, therefore,
have not generated any product sales from our drug candidates.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>LIQUIDITY
AND CAPITAL RESOURCES</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">We
have incurred operating losses since our inception, and expect to continue to incur operating losses for the foreseeable future
and may never become profitable. As of December 31, 2016, we have an accumulated deficit of $236.4 million.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Our
major sources of cash have been proceeds from the private placement and public offering of equity securities. We have not yet
commercialized any of our drug candidates and cannot be sure if we will ever be able to do so. Even if we commercialize one or
more of our drug candidates, we may not become profitable. Our ability to achieve profitability depends on many factors, including
our ability to obtain regulatory approval for our drug candidates; successfully complete any post-approval regulatory obligations;
and successfully commercialize our drug candidates alone or in partnership. We may continue to incur substantial operating losses
even if we begin to generate revenues from our drug candidates.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">As
of December 31, 2016, we had $45.0 million in cash and cash equivalents, investment securities, and interest receivable. The Company
believes its cash, cash equivalents, investment securities, and interest receivable on hand as of December 31, 2016 combined with
the additional capital raised in the first quarter of 2017 (see Note 13) will be sufficient to fund the Company’s planned
operations for approximately the next 24 months. The actual amount of cash that we will need to operate is subject to many factors,
including, but not limited to, the timing, design and conduct of clinical trials for our drug candidates. We are dependent upon
significant future financing to provide the cash necessary to execute our current operations, including the commercialization
of any of our drug candidates</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Our
common stock is quoted on the Nasdaq Capital Market and trades under the symbol “TGTX.”</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>RECENTLY
ISSUED ACCOUNTING STANDARDS</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In
January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”)
No. 2017-04, “Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 removes the requirement
to compare the implied fair value of goodwill with its carrying amount as part of step 2 of the goodwill impairment test. As a
result, under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value
of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount
exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated
to that reporting unit. In addition, ASU 2017-04:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 40pt"><font style="font: 8pt Times New Roman, Times, Serif">●
Clarifies the requirements for excluding and allocating foreign currency translation adjustments to reporting units in connection
with an entity’s testing of reporting units for goodwill impairment.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 40pt"><font style="font: 8pt Times New Roman, Times, Serif">●
Clarifies that an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting
unit when measuring the goodwill impairment loss, if applicable.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 40pt; text-align: justify"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 40pt"><font style="font: 8pt Times New Roman, Times, Serif">●
Makes minor changes to the overview and background sections of certain Accounting Standards Codification (“ASC” or
“Codification”) subtopics and topics as part of the Board’s initiative to unify and improve those sections throughout
the Codification.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">ASU
2017-04 is effective prospectively for annual and interim periods beginning on or after December 15, 2019, and early adoption
is permitted on testing dates after January 1, 2017. We are currently evaluating the impact the adoption of ASU 2017-04 will have
on our consolidated financial statements.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In
November 2016, the FASB issued ASU 2016-18, “Restricted Cash – a consensus of the FASB Emerging Issues Task Force”
(“ASU 2016-18”). ASU 2016-18 amends ASC 230 to add or clarify guidance on the classification and presentation of restricted
cash in the statement of cash flows. Key requirements of the ASU are as follows:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 40pt"><font style="font: 8pt Times New Roman, Times, Serif">●
An entity should include in its cash and cash-equivalent balances in the statement of cash flows those amounts that are deemed
to be restricted cash and restricted cash equivalents. The ASU does not define the terms “restricted cash” and “restricted
cash equivalents” but states that an entity should continue to provide appropriate disclosures about its accounting policies
pertaining to restricted cash in accordance with other GAAP. The ASU also states that any change in accounting policy will need
to be assessed under ASC 250.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 40pt"><font style="font: 8pt Times New Roman, Times, Serif">●
A reconciliation between the statement of financial position and the statement of cash flows must be disclosed when the statement
of financial position includes more than one line item for cash, cash equivalents, restricted cash, and restricted cash equivalents.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 40pt"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 40pt"><font style="font: 8pt Times New Roman, Times, Serif">●
Changes in restricted cash and restricted cash equivalents that result from transfers between cash, cash equivalents, and restricted
cash and restricted cash equivalents should not be presented as cash flow activities in the statement of cash flows.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 40pt"><font style="font: 8pt Times New Roman, Times, Serif">●
An entity with a material balance of amounts generally described as restricted cash and restricted cash equivalents must disclose
information about the nature of the restrictions.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 40pt; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">ASU
2016-18 is effective for annual and interim periods beginning after December 15, 2017, and early adoption is permitted for all
entities. We are currently evaluating the impact the adoption of ASU 2016-18 will have on our consolidated financial statements.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In
August 2016, the FASB issued ASU No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments” (“ASU
2016-15”). ASU 2016-15 amends the guidance in ASC 230 on the classification of certain cash receipts and payments in the
statement of cash flows. The primary purpose of ASU 2016-15 is to reduce the diversity in practice that has resulted from the
lack of consistent principles on this topic. The amendments in ASU 2016-15 add or clarify guidance on eight cash flow issues:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 40pt"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 40pt"><font style="font: 8pt Times New Roman, Times, Serif">●
Debt prepayment or debt extinguishment costs.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 40pt"><font style="font: 8pt Times New Roman, Times, Serif">●
Settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation
to the effective interest rate of the borrowing.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 40pt"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 40pt"><font style="font: 8pt Times New Roman, Times, Serif">●
Contingent consideration payments made after a business combination.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 40pt"><font style="font: 8pt Times New Roman, Times, Serif">●
Proceeds from the settlement of insurance claims.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 40pt"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 40pt"><font style="font: 8pt Times New Roman, Times, Serif">●
Proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 40pt"><font style="font: 8pt Times New Roman, Times, Serif">●
Distributions received from equity method investees.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 40pt"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 40pt"><font style="font: 8pt Times New Roman, Times, Serif">●
Beneficial interests in securitization transactions.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 40pt"><font style="font: 8pt Times New Roman, Times, Serif">●
Separately identifiable cash flows and application of the predominance principle.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">ASU
2016-15 is effective for annual and interim periods beginning after December 15, 2017, and early adoption is permitted for all
entities. Entities must apply the guidance retrospectively to all periods presented but may apply it prospectively from the earliest
date practicable if retrospective application would be impracticable. The provisions of this standard are not expected to significantly
impact the Company.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In
May 2016, the FASB issued ASU No. 2016-11, “Rescission of SEC Guidance Because of Accounting Standards Update 2014-09 and
2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting” (“ASU 2016-11”). ASU 2016-11 rescinds
certain SEC guidance from the FASB Codification in response to announcements made by the SEC staff at the Emerging Issues Task
Force’s March 3, 2016 meeting. Specifically, ASU 2016-11 supersedes SEC observer comments on the following topics:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 40pt"><font style="font: 8pt Times New Roman, Times, Serif">●
Upon the adoption of ASU 2014-09:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 60pt"><font style="font: 8pt Times New Roman, Times, Serif">o
Revenue and expense recognition for freight services in process (ASC 605-20-S99-2)</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 60pt"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 60pt"><font style="font: 8pt Times New Roman, Times, Serif">o
Accounting for shipping and handling fees and costs (ASC 605-45-S99-1)</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 60pt"><font style="font: 8pt Times New Roman, Times, Serif">o
Accounting for consideration given by a vendor to a customer (ASC 605-50-S99-1)</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 60pt"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 60pt"><font style="font: 8pt Times New Roman, Times, Serif">o
Accounting for gas-balancing arrangements (ASC 932-10-S99-5)</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 40pt; text-align: justify"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 40pt"><font style="font: 8pt Times New Roman, Times, Serif">●
Upon the adoption of ASU 2014-16:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 60pt"><font style="font: 8pt Times New Roman, Times, Serif">o
Determining the nature of a host contract related to a hybrid financial instrument issued in the form of a share under ASC 815
(ASC 815-10-S99-3).</font></p>
<p style="margin-top: 0pt; margin-bottom: 0pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="margin-top: 0pt; margin-bottom: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">ASU
2016-11 is effective upon the adoption of ASU 2014-09 and ASU 2014-16. The adoption of ASU 2016-11 is not expected to have a material
impact on the Company’s consolidated financial statements.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In
March 2016, the FASB issued ASU No. 2016-09, “Simplifying the Accounting for Share-Based Payments” (“ASU 2016-09”).
ASU 2016-09 simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic
entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification
in the statement of cash flows. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016, including
interim periods within those annual reporting periods. The provisions of this standard are not expected to significantly impact
the Company.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In
February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires lessees to recognize assets and
liabilities for the rights and obligations created by most leases on their balance sheet. The guidance is effective for fiscal
years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted.
ASU 2016-02 requires modified retrospective adoption for all leases existing at, or entered into after, the date of initial application,
with an option to use certain transition relief. The Company is currently evaluating the impact the standard may have on its consolidated
financial statements and related disclosures.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In
August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40)”,
which will require management to assess an entity’s ability to continue as a going concern at each annual and interim period.
Related footnote disclosures will be required if conditions give rise to substantial doubt about an entity’s ability to
continue as a going concern within one year of the report issuance date. If conditions do not give rise to substantial doubt,
no disclosures will be required specific to going concern uncertainties. The guidance defines substantial doubt using a likelihood
threshold of “probable” similar to the current use of that term in U.S. GAAP for loss contingencies and provides example
indicators. The guidance is effective for reporting periods ending after December 15, 2016, and early adoption is permitted. Therefore,
the Company has adopted this new standard on December 15, 2016. The adoption of this standard did not have a material
impact on our consolidated financial statements as of December 31, 2016.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Other
pronouncements issued by the FASB or other authoritative accounting standards group with future effective dates are either not
applicable or not significant to our consolidated financial statements.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>USE
OF ESTIMATES</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">The
preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires
management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the applicable
reporting period. Actual results could differ from those estimates. Such differences could be material to the financial statements.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>CASH
AND CASH EQUIVALENTS</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">We
treat liquid investments with original maturities of less than three months when purchased as cash and cash equivalents.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>RESTRICTED
CASH</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">We
record cash pledged or held in trust as restricted cash. As of December 31, 2016, we have approximately $0.6 million of restricted
cash pledged to secure a line of credit as a security deposit for an Office Agreement (see Note 9).</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>INVESTMENT
SECURITIES</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Investment
securities at December 31, 2016 consist of short-term government securities and at December 31, 2015 consist of short-term and
long-term government securities. We classify these securities as held-to-maturity. Held-to-maturity securities are those securities
in which we have the ability and intent to hold the security until maturity. Held-to-maturity securities are recorded at amortized
cost, adjusted for the amortization or accretion of premiums or discounts. Premiums and discounts are amortized or accreted over
the life of the related held-to-maturity security as an adjustment to yield using the effective interest method.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">A
decline in the market value of any investment security below cost, that is deemed to be other than temporary, results in a reduction
in the carrying amount to fair value. The impairment is charged to operations and a new cost basis for the security is established.
Other-than-temporary impairment charges are included in interest and other income (expense), net. Unrealized gains, if determined
to be temporary, are included in accumulated other comprehensive income in equity. Dividend and interest income are recognized
when earned.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>CREDIT
RISK</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Financial
instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents
and short-term investments. The Company maintains its cash and cash equivalents with high-credit quality financial institutions.
At times, such amounts may exceed federally-insured limits.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>REVENUE
RECOGNITION</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">We
recognize license revenue in accordance with the revenue recognition guidance of the FASB Accounting Standards Codification, or
Codification. We analyze each element of our licensing agreement to determine the appropriate revenue recognition. The terms of
the license agreement may include payments to us of non-refundable up-front license fees, milestone payments if specified objectives
are achieved, and/or royalties on product sales. We recognize revenue from upfront payments over the period of significant involvement
under the related agreements unless the fee is in exchange for products delivered or services rendered that represent the culmination
of a separate earnings process and no further performance obligation exists under the contract. We recognize milestone payments
as revenue upon the achievement of specified milestones only if (1) the milestone payment is non-refundable, (2) substantive
effort is involved in achieving the milestone, (3) the amount of the milestone is reasonable in relation to the effort expended
or the risk associated with achievement of the milestone, and (4) the milestone is at risk for both parties. If any of these
conditions are not met, we defer the milestone payment and recognize it as revenue over the estimated period of performance under
the contract.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">  </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>RESEARCH
AND DEVELOPMENT COSTS</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Generally,
research and development costs are expensed as incurred. Nonrefundable advance payments for goods or services that will be used
or rendered for future research and development activities are deferred and amortized over the period that the goods are delivered
or the related services are performed, subject to an assessment of recoverability. We make estimates of costs incurred in relation
to external clinical research organizations, or CROs, and clinical site costs. We analyze the progress of clinical trials, including
levels of patient enrollment, invoices received and contracted costs when evaluating the adequacy of the amount expensed and the
related prepaid asset and accrued liability. Significant judgments and estimates must be made and used in determining the accrued
balance and expense in any accounting period. We review and accrue CRO expenses and clinical trial study expenses based on work
performed and rely upon estimates of those costs applicable to the stage of completion of a study. Accrued CRO costs are subject
to revisions as such trials progress to completion. Revisions are charged to expense in the period in which the facts that give
rise to the revision become known. With respect to clinical site costs, the financial terms of these agreements are subject to
negotiation and vary from contract to contract. Payments under these contracts may be uneven, and depend on factors such as the
achievement of certain events, the successful recruitment of patients, the completion of portions of the clinical trial or similar
conditions. The objective of our policy is to match the recording of expenses in our financial statements to the actual services
received and efforts expended. As such, expense accruals related to clinical site costs are recognized based on our estimate of
the degree of completion of the event or events specified in the specific clinical study or trial contract.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Prepaid
research and development in our consolidated balance sheets includes, among other things, certain fees related to development
and manufacturing services. These development and manufacturing agreements often require payments in advance of services performed
or goods received. Accordingly, as of December 31, 2016 and 2015, we recorded approximately $5.7 million and $9.2 million, respectively,
in prepaid research and development related to such advance agreements.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>INCOME
TAXES</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Income
taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases, operating losses and tax credit carryforwards. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in operations in the period that includes the enactment date. If the likelihood of realizing the deferred tax assets or liability
is less than “more likely than not,” a valuation allowance is then created.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">We,
and our subsidiaries, file income tax returns in the U.S. Federal jurisdiction and in various states. We have tax net operating
loss carryforwards that are subject to examination for a number of years beyond the year in which they were generated for tax
purposes. Since a portion of these net operating loss carryforwards may be utilized in the future, many of these net operating
loss carryforwards will remain subject to examination. We recognize interest and penalties related to uncertain income tax positions
in income tax expense.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>STOCK-BASED
COMPENSATION</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">We
recognize all share-based payments to employees and non-employee directors (as compensation for service) as noncash compensation
expense in the consolidated financial statements based on the fair values of such payments. Stock-based compensation expense recognized
each period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the
period. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures
differ from those estimates.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">For
share-based payments to consultants and other third-parties (including related parties), noncash compensation expense is determined
at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date
is reached, the total amount of compensation expense remains uncertain. We record compensation expense based on the fair value
of the award at the reporting date. The awards to consultants and other third-parties (including related parties) are then revalued,
or the total compensation is recalculated based on the then current fair value, at each subsequent reporting date.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">In
addition, because some of the options, restricted stock and warrants issued to employees, consultants and other third-parties
vest upon achievement of certain milestones, the total expense is uncertain. Compensation expense for such awards that vest upon
the achievement of milestones is recognized when the achievement of such milestone becomes probable.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>BASIC
AND DILUTED NET LOSS PER COMMON SHARE</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Basic
net loss per common share is calculated by dividing net loss applicable to common shares by the weighted-average number of common
shares outstanding for the period. Diluted net loss per common share is the same as basic net loss per common share, since potentially
dilutive securities from stock options, stock warrants and convertible notes would have an antidilutive effect either because
the Company incurred a net loss during the period presented or because such potentially dilutive securities were out of the money
and the Company realized net income during the period presented. The amounts of potentially dilutive securities excluded from
the calculation were 8,033,779, 7,064,396 and 8,890,796 at December 31, 2016, 2015 and 2014, respectively. During the years ended
December 31, 2016, 2015 and 2014 the Company incurred a net loss, therefore, all of the securities are antidilutive and excluded
from the computation of diluted loss per share</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="10" style="text-align: center; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"><b>December
31,</b></font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2016</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2015</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2014</b></font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="width: 64%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Unvested
restricted stock</font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 0%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">7,142,055</font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 0%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">5,859,914</font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 0%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">4,725,001</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Warrants</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">876,912</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">1,186,749</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">4,148,228</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Shares
issuable upon note conversion</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">14,812</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">17,733</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">17,373</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Options</font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">--</font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">--</font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">194</font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Total</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">8,033,779</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7,064,396</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">8,890,796</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"><b>LONG-LIVED
ASSETS AND GOODWILL</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Long-lived
assets are reviewed for an impairment loss when circumstances indicate that the carrying value of long-lived tangible and intangible
assets with finite lives may not be recoverable. Management’s policy in determining whether an impairment indicator, a triggering
event, exists comprises measurable operating performance criteria as well as qualitative measures. If an analysis is necessitated
by the occurrence of a triggering event, we make certain assumptions in determining the impairment amount. If the carrying amount
of an asset exceeds its estimated future cash flows, an impairment charge is recognized.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Goodwill
is reviewed for impairment annually, or when events arise that could indicate that an impairment exists. We test for goodwill
impairment using a two-step process. The first step compares the fair value of the reporting unit with the unit's carrying value,
including goodwill. When the carrying value of the reporting unit is greater than fair value, the unit’s goodwill may be
impaired, and the second step must be completed to measure the amount of the goodwill impairment charge, if any. In the second
step, the implied fair value of the reporting unit’s goodwill is compared with the carrying amount of the unit’s goodwill.
If the carrying amount is greater than the implied fair value, the carrying value of the goodwill must be written down to its
implied fair value. We will continue to perform impairment tests annually, at December 31, and whenever events or changes in circumstances
suggest that the carrying value of an asset may not be recoverable.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following tables summarize our cash and cash
equivalents at December 31, 2016 and 2015:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2015</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 72%"><font style="font-size: 8pt">Money market funds</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 11%; text-align: right"><font style="font-size: 8pt">20,978,947</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 11%; text-align: right"><font style="font-size: 8pt">8,265,583</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Checking and bank deposits</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">4,052,333</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">46,795,746</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">    Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">25,031,280</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">55,061,329</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our investments as of December 31, 2016 and 2015
are classified as held-to-maturity. Held-to-maturity investments are recorded at amortized cost. During the year ended December
31, 2016, we liquidated our long-term investment securities with a net carrying amount of approximately $12.6 million, realizing
a gain of approximately $33,000 on the sale. The decision to sell our long-term securities was made due to market rate conditions
on long-term securities coupled with the recognized gain we were able to yield on the sale of the securities.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following tables summarize our investment
securities at December 31, 2016 and 2015:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Amortized cost, as adjusted</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Gross unrealized holding gains</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Gross unrealized holding losses</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Estimated fair value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Short-term investments:</font></td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">Obligations of domestic governmental agencies (maturing between February 2017 and September 2017) (held-to-maturity)</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">19,853,860</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">3,270</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2,492</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">19,854,638</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">    Total short-term investment securities</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">19,853,860</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">3,270</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">2,492</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">19,854,638</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2015</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Amortized cost, as adjusted</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><p style="margin-top: 0; margin-bottom: 0"><font style="font-size: 8pt"><b>Gross</b></font></p>
<p style="margin-top: 0; margin-bottom: 0"><font style="font-size: 8pt"><b> unrealized holding gains</b></font></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Gross unrealized holding losses</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Estimated fair value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Short-term investments:</font></td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">Obligations of domestic governmental agencies (maturing between January 2016 and December 2016) (held-to-maturity)</font></td>
<td style="width: 1%"> </td>
<td style="width: 0%"><font style="font-size: 8pt">  $</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">$22,166,512</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 0%"><font style="font-size: 8pt">  $</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 0%"><font style="font-size: 8pt">  $</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">$22,822</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 0%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">$22,143,690</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Long-term investments:</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Obligations of domestic governmental agencies (maturing between January 2017 and December 2017) (held-to-maturity)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">25,003,032</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">85,846</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">24,917,186</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">    Total short-term and long-term investment securities</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">  $</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">47,169,544</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">  $</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">  $</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">108,668</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">  $</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">47,060,876</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We measure certain financial assets and liabilities
at fair value on a recurring basis in the financial statements. The fair value hierarchy ranks the quality and reliability of inputs,
or assumptions, used in the determination of fair value and requires financial assets and liabilities carried at fair value to
be classified and disclosed in one of the following three categories:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellpadding="0" style="width: 100%">
<tr>
<td style="vertical-align: top; width: 72px; padding: 0.75pt; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">Level 1 – quoted prices in active markets for identical assets and liabilities;</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table cellpadding="0" style="width: 100%">
<tr>
<td style="vertical-align: top; width: 72px; padding: 0.75pt; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">Level 2 – inputs other than Level 1 quoted prices that are directly or indirectly observable; and</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>
<table cellpadding="0" style="width: 100%">
<tr>
<td style="vertical-align: top; width: 72px; padding: 0.75pt; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">Level 3 – unobservable inputs that are not corroborated by market data.</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As of December 31, 2016 and 2015, the fair values
of cash and cash equivalents, restricted cash, and notes and interest payable approximate their carrying value.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="background-color: white">At the
time of our merger (we were then known as Manhattan Pharmaceuticals, Inc. (“Manhattan”)) with Ariston Pharmaceuticals,
Inc. (“Ariston”) in March 2010, Ariston issued $15.5 million of five-year 5% notes payable (the “5% Notes”)
in satisfaction of several note payable issuances.  The 5% Notes and accrued and unpaid interest thereon are convertible
at the option of the holder into common stock at the conversion price of $1,125 per share.  Ariston agreed to make quarterly
payments on the 5% Notes equal to 50% of the net product cash flow received from the exploitation or commercialization of
Ariston’s product candidates, AST-726 and AST-915.  We have no obligations under the 5% Notes aside from a) 50%
of the net product cash flows from Ariston’s product candidates, if any, payable to noteholders; and b) the conversion feature,
discussed above.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="background-color: white">The cumulative
liability including accrued and unpaid interest of the 5% Notes was approximately $16.7 million at December 31, 2016 and $19.9
million at December 31, 2015.</font> No payments have been made on the 5% Notes as of December 31, 2016.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In December 2011, we elected the fair value option
for valuing the 5% Notes. The fair value option was elected in order to reflect in our financial statements the assumptions that
market participants use in evaluating these financial instruments.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As of December 31, 2013, as a result of expiring
intellectual property rights and other factors, it was determined that net product cash flows from AST-726 were unlikely. As we
have no other obligations under the 5% Notes aside from the net product cash flows and the conversion feature, the conversion feature
was used to estimate the 5% Notes’ fair value as of December 31, 2016 and 2015. The assumptions, assessments and projections
of future revenues are subject to uncertainties, difficult to predict, and require significant judgment. The use of different assumptions,
applying different judgment to inherently subjective matters and changes in future market conditions could result in significantly
different estimates of fair value and the differences could be material to our consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following tables provide the fair value measurements
of applicable financial liabilities as of December 31, 2016 and 2015:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Financial liabilities at fair value as of December 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 1</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 2</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 3</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">5% Notes</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">    Totals</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Financial liabilities at fair value as of December 31, 2015</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 1</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 2</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 3</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">5% Notes</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">211,549</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">211,549</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">    Totals</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">211,549</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">211,549</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The Level 3 amounts above represent the fair
value of the 5% Notes and related accrued interest.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table summarizes the changes in
Level 3 instruments for the years ended December 31, 2015 and 2016:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="width: 88%"><font style="font-size: 8pt">Balance at January 1, 2015</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">  $</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">275,190</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">     Interest accrued on face value of 5% Notes</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">972,736</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">     Conversion of 5% Notes</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(6,924</font></td>
<td><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">     Change in fair value of Level 3 liabilities</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(1,029,453</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Balance at December 31, 2015</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">211,549</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">     Interest accrued on face value of 5% Notes</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">886,084</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">     Conversion of 5% Notes</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(33,017</font></td>
<td><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">     Change in fair value of Level 3 liabilities</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(995,741</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Balance at December 31, 2016</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">  $</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The change in the fair value of the Level 3 liabilities
is reported in other (income) expense in the accompanying consolidated statements of operations.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Preferred Stock</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our amended and restated certificate of incorporation
authorizes the issuance of up to 10,000,000 shares of preferred stock, $0.001 par value, with rights senior to those of our common
stock, <font style="background-color: white">issuable in one or more series. Upon issuance, the Company can determine the rights,
preferences, privileges and restrictions thereof. These rights, preferences and privileges could include dividend rights, conversion
rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting any
series or the designation of such series, any or all of which may be greater than the rights of common stock.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Stockholder Rights Plan</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">On July 18, 2014, we adopted a stockholder rights
plan. The stockholder rights plan is embodied in the Stockholder Protection Rights Agreement dated as of July 18, 2014 (the "Rights
Agreement"), between us and American Stock Transfer & Trust Company, LLC, as rights agent (the "Rights Agent").</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Accordingly, the Board of Directors declared
a distribution of one right (a “Right”) for each outstanding share of common stock, to stockholders of record at the
close of business on July 28, 2014, for each share of common stock issued (including shares distributed from treasury) by us thereafter
and prior to the Separation Time (as defined in the Rights Agreement), and for certain shares of common stock issued after the
Separation Time. Following the Separation Time, each Right entitles the registered holder to purchase from us one one-thousandth
(1/1,000) of a share of Series A Junior Participating Preferred Stock, par value $0.001 per share (the "Preferred Stock"),
at a purchase price of $100.00 (the "Exercise Price"), subject to adjustment. The description and terms of the Rights
are set forth in the Rights Agreement. Each one one-thousandth of a share of Preferred Stock has substantially the same rights
as one share of common stock. Subject to the terms and conditions of the Rights Agreement, Rights become exercisable ten days after
the public announcement that a “Person” has become an “Acquiring Person” (as each such term is defined
in the Rights Agreement). Any Rights held by an Acquiring Person are void and may not be exercised.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">If a Person becomes an Acquiring Person, all
holders of Rights, except the Acquiring Person, may purchase at the Right’s then-current exercise price, common stock having
a market value equal to twice the exercise price. Moreover, at any time after a Person becomes an Acquiring Person (unless such
Person acquires 50 percent or more of our common stock then outstanding, as more fully described in the Rights Agreement), the
Board of Directors may exchange all (but not less than all) of the then outstanding Rights (other than rights owned by such Person,
which would have become void) for shares of common stock at an exchange ratio of one share of common stock per Right, appropriately
adjusted in order to protect the interests of holders of Rights.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The Rights Agreement was approved by our Board
of Directors on July 18, 2014. The Rights will expire at the close of business on its ten year anniversary, unless earlier exchanged
or terminated by us.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Common Stock</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our amended and restated certificate of incorporation
authorizes the issuance of up to 150,000,000 shares of $0.001 par value common stock.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="background-color: white">On June
21, 2013, we entered into an At-the-Market Issuance Sales Agreement (the "2013 ATM") with MLV & Co. LLC ("MLV")
under which we could issue and sell shares of our common stock, having an aggregate offering price of up to $50.0 million, from
time to time through MLV, acting as the sales agent. Under the agreement we would pay MLV a commission rate of up to 3.0% of the
gross proceeds from the sale of any shares of common stock sold through MLV.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="background-color: white">During
the year ended December 31, 2014, we sold a total of 4,850,055 shares of common stock under the 2013 ATM for aggregate total gross
proceeds of approximately $50.0 million at an average selling price of $10.31 per share. Net proceeds were approximately $48.9
million after deducting commissions and other transactions costs.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="background-color: white">In December
2014, we filed a shelf registration statement on Form S-3 (the "2015 S-3"), which was declared effective in January 2015.
Under the 2015 S-3, the Company may sell up to a total of $250 million of its securities. In connection with the 2015 S-3, we amended
our 2013 At-the-Market Issuance Sales Agreement with MLV (the "2015 ATM") such that we may issue and sell additional
shares of our common stock, having an aggregate offering price of up to $175.0 million, from time to time through MLV and FBR Capital
Markets & Co. ("FBR", each of MLV and FBR individually an "Agent" and collectively the "Agents"),
acting as the sales agents. Under the 2015 ATM we pay the Agents a commission rate of up to 3.0% of the gross proceeds from the
sale of any shares of common stock sold through the Agents.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="background-color: white">During
the year ended December 31, 2016, we sold a total of 570,366 shares of common stock under the 2015 ATM for aggregate total gross
proceeds of approximately $4.5 million at an average selling price of $7.88 per share, resulting in net proceeds of approximately
$4.4 million after deducting commissions and other transaction costs. During the year ended December 31, 2015, we sold a total
of 4,094,498 shares of common stock under the 2015 ATM for aggregate total gross proceeds of approximately $68.2 million at an
average selling price of $16.66 per share, resulting in net proceeds of approximately $67.0 million after deducting commissions
and other transaction costs.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="background-color: white">The 2015
S-3 is currently our only active shelf registration statement. After deducting shares already sold, including under the 2015 ATM,
there is approximately $177.3 million of common stock that remains available for sale under the 2015 S-3. We may offer the securities
under the 2015 S-3 from time to time in response to market conditions or other circumstances if we believe such a plan of financing
is in the best interests of our stockholders. We believe that the 2015 S-3 provides us with the flexibility to raise additional
capital to finance our operations as needed.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Treasury Stock</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As of December 31, 2016 and 2015, 41,309 shares
of common stock are being held in Treasury, at a cost of approximately $234,000, representing the fair market value on the date
the shares were surrendered to the Company to satisfy employee tax obligations.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Equity Incentive Plans</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> The TG Therapeutics, Inc. Amended and Restated
2012 Incentive Plan (“2012 Incentive Plan”) was approved by stockholders in June 2015. As of December 31, 2016 and
2015, no options were outstanding and up to an additional 2,286,764 shares may be issued under the 2012 Incentive Plan.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><u>Stock Options</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table summarizes stock option activity
for the years ended December 31, 2016, 2015 and 2014:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Number</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>of shares</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted-</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>average</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>exercise price</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted-</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>average</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>contractual term</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Aggregate intrinsic value</b></p></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>(in years)</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">Outstanding at January 1, 2014</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 9%; padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">46,591</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">46.37</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 9%; padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">8.50</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(46,000</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">4.40</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Forfeited</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expired</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(397</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">4,457.57</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at December 31, 2014</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">194</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">971.70</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">3.50</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Forfeited</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(152</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">463.32</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expired</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(42</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">2,811.53</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at December 31, 2015</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Forfeited</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expired</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at December 31, 2016</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercisable at December 31, 2016</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As of December 31, 2016, there are no unvested
option awards and no unrecognized compensation cost related to option awards.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><u>Restricted Stock</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Certain employees, directors and consultants
have been awarded restricted stock. The restricted stock vesting consists of milestone and time-based vesting. The following table
summarizes restricted share activity for the years ended December 31, 2016, 2015 and 2014:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Number of Shares</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted Average Grant Date Fair Value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Outstanding at January 1, 2014</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">7,034,957</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">4.60</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">982,793</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">13.55</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Vested</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(1,616,749</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">6.53</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Forfeited</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(1,000</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">6.60</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at December 31, 2014</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">6,400,001</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">5.86</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,992,535</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">12.89</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Vested</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(1,001,455</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">5.04</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Forfeited</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(31,166</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">16.76</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at December 31, 2015</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">7,359,915</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">7.83</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,924,639</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">4.99</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Vested</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(595,726</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">7.38</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Forfeited</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(46,773</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">10.34</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at December 31, 2016</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">8,642,055</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">7.20</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Total expense associated with restricted stock
grants was $7,509,999, $15,697,092 and $20,726,512 during the years ended December 31, 2016, 2015 and 2014, respectively. As of
December 31, 2016, there was approximately $18.8 million of total unrecognized compensation cost related to unvested time-based
restricted stock, which is expected to be recognized over a weighted-average period of 1.6 years. This amount does not include,
as of December 31, 2016, 696,172 shares of restricted stock outstanding which are milestone-based and vest upon certain corporate
milestones; and 2,477,958 shares of restricted stock outstanding issued to non-employees. Milestone-based non-cash compensation
expense will be measured and recorded if and when a milestone becomes probable. The expense for non-employee shares is determined
at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date
is reached, the total amount of compensation expense remains uncertain. We record compensation expense based on the fair value
of the award at the reporting date.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><u>Warrants</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table summarizes warrant activity
for the years ended December 31, 2016, 2015 and 2014:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Warrants</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted-</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>average</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>exercise price</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Aggregate intrinsic value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 64%"><font style="font-size: 8pt">Outstanding at January 1, 2014</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 9%; padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">5,718,947</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">1.34</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">14,809,030</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Issued</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(1,560,826</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2.28</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expired</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(9,893</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">20.74</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at December 31, 2014</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">4,148,228</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">0.94</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">61,792,184</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Issued</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(2,950,115</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">0.36</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expired</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(11,364</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">2.25</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at December 31, 2015</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">1,186,749</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">2.37</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">11,341,452</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Issued</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(273,370</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2.26</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expired</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(36,467</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">2.25</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at December 31, 2016</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">876,912</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">2.41</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">1,961,403</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Stock-Based Compensation</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The fair value of stock options granted is estimated
at the date of grant using the Black-Scholes pricing model. The expected term of options granted is derived from historical data
and the expected vesting period. Expected volatility is based on the historical volatility of our common stock. The risk-free interest
rate is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of
the grant. We have assumed no expected dividend yield, as dividends have never been paid to stock or option holders and will not
be paid for the foreseeable future. The Company did not grant any stock options during the years ended December 31, 2016, 2015
and 2014.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table summarizes stock-based compensation
expense information about stock options and restricted stock for the years ended December 31, 2016, 2015 and 2014:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt"><b>2015</b></font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt">  <b>2014</b></font></td>
<td style="vertical-align: bottom"> </td>
<td colspan="4"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 64%"><font style="font-size: 8pt">Stock-based compensation expense associated with restricted stock</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">$7,509,999</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">$15,697,092</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">$20,726,512</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Stock-based compensation expense associated with stock options</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">378,780</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">$7,509,999</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">$15,697,092</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">$21,105,292</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following is a summary of notes payable:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31, 2016</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31, 2015</b></p></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Non-current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Non-current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 40%"><font style="font-size: 8pt">Convertible 5% Notes Payable</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">211,549</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">211,549</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">  Totals</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">211,549</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">211,549</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Convertible 5% Notes Payable</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The 5% Notes and accrued and unpaid interest
thereon are convertible at the option of the holder into common stock at the conversion price of $1,125 per share. <font style="background-color: white">We
have no obligation under the 5% Notes aside from (a) 50% of the net product cash flows from Ariston’s product candidates,
if any, payable to noteholders; and (b) the conversion feature, discussed above.</font> Interest accrues monthly, is added to principal
on an annual basis, every March 8, and is payable at maturity, which was March 8, 2015 (see Note 4 for further details).</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="background-color: white">The cumulative
liability including accrued and unpaid interest of these notes was approximately $16.7 million at December 31, 2016 and $19.9 million
at December 31, 2015.</font> No payments have been made on the 5% Notes as of <font style="background-color: white">December 31</font>,
2016.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In December 2011, we elected the fair value option
for valuing the 5% Notes. The fair value option was elected in order to reflect in our financial statements the assumptions that
market participants use in evaluating these financial instruments (see Note 4 for further details).</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We account for income taxes under the asset and
liability method. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax
basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected
to be realized. In determining the need for a valuation allowance, management reviews both positive and negative evidence, including
current and historical results of operations, future income projections and the overall prospects of our business. Based upon management's
assessment of all available evidence, we believe that it is more-likely-than-not that the deferred tax assets will not be realizable,
and therefore, a valuation allowance has been established. The valuation allowance for deferred tax assets was approximately $116,172,000
and $86,359,000 as of December 31, 2016 and 2015, respectively.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As of December 31, 2016, we have U.S. net operating
loss carryforwards ('NOLs") of approximately $271,828,000 and research and development credit carryforwards (?R&D credits?)
of approximately $7,327,000. For income tax purposes, these NOLs and R&D credits will expire in various amounts through 2036.
The Tax Reform Act of 1986 contains provisions which limit the ability to utilize net operating loss carryforwards and R&D
credit carryforwards in the case of certain events including significant changes in ownership interests. The Exchange Transaction
with TG Bio may have resulted in a "change in ownership" as defined by IRC Section 382 of the Internal Revenue Code of
1986, as amended. Additionally, stock issuance activities may have resulted in a "change in ownership" as defined by
IRC Section 382 of the Internal Revenue Code of 1986, as amended. Accordingly, a substantial portion of the Company's NOLs above
may be subject to annual limitations in reducing any future year's taxable income, and a substantial portion of the R&D Credit
carryforwards may be subject to annual limitations in reducing any future year's tax.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The tax effects of temporary differences that
give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2016 and 2015 are presented
below.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2015</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Deferred tax assets (liabilities):</font></td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Net operating loss carryforwards</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">95,329,928</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">68,700,379</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Research and development credit</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">7,326,715</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">4,962,298</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Noncash compensation</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">12,915,672</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">12,087,968</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Other</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">599,514</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">608,205</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Deferred tax asset, excluding valuation allowance</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">116,171,829</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">86,358,850</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Less valuation allowance</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(116,171,829</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(86,358,850</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Net deferred tax assets</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">There was no current or deferred income tax expense
for the year ended December 31, 2016. Income tax expense differed from amounts computed by applying the US Federal income
tax rate of 34% to pretax loss as follows:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>For the year ended December 31,</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2015</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2014</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 64%"><font style="font-size: 8pt">Loss before income taxes, as reported in the consolidated statements of operations</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 0%; border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(78,252,894</font></td>
<td style="width: 1%; padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 0%; border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(62,948,646</font></td>
<td style="width: 1%; padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 0%; border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(55,781,277</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Computed “expected” tax benefit</font></td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">(26,605,984</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">(21,402,540</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">(18,965,634</font></td>
<td><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Increase (decrease) in income taxes resulting from:</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">  Expected benefit from state and local taxes</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(835,072</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(672,306</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(2,533,156</font></td>
<td><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">  Research and development credits</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(2,364,417</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(1,603,364</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(1,092,767</font></td>
<td><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">  Other</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(7,506</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">566,310</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">35,459</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">  Permanent difference related to contingent note payable</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(244,814</font></td>
<td><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">  Impact of change in state tax rates on deferred taxes</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">5,836,819</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">  Change in the balance of the valuation allowance for deferred tax assets</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">29,812,979</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">17,275,081</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">22,800,912</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We file income tax returns in the U.S Federal
and various state and local jurisdictions. With certain exceptions, the Company is no longer subject to U.S. Federal and state
income tax examinations by tax authorities for years prior to 2013. However, NOLs and tax credits generated from those prior years
could still be adjusted upon audit.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The Company would recognize interest and penalties,
if any, to uncertain tax position in income tax expense in the statement of operations. There was no accrual for interest and penalties
related to uncertain tax positions for 2016. We do not believe that there will be a material change in our unrecognized tax
positions over the next twelve months. All of the unrecognized tax benefits, if recognized, would be offset by the valuation
allowance.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>BET</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In May 2016, as part of a broader agreement with
Jubilant Biosys (“Jubilant”), an India-based biotechnology company, we entered into a sub-license agreement (“JBET
Agreement”) with Checkpoint Therapeutics, Inc. (“Checkpoint”) (see Note 9), for the development and commercialization
of Jubilant’s novel BET inhibitor program in the field of hematological malignancies.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Under the terms of the agreement, we paid Checkpoint
an up-front licensing fee of $1.0 million and will make additional payments contingent on certain preclinical, clinical, and regulatory
milestones, including commercial milestones totaling up to approximately $177 million and a single-digit royalty on net sales.
TG will also provide funding to support certain targeted research efforts at Jubilant.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Anti-PD-L1 and anti-GITR</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">On March 3, 2015, we entered into a Global Collaboration
Agreement (the “Collaboration”) with Checkpoint, a subsidiary of Fortress Biotech, Inc. (“FBIO”), a
related party, for the development and commercialization of Checkpoint’s anti-PD-L1 and anti-GITR antibody research programs
in the field of hematological malignancies. Checkpoint retains the rights to develop and commercialize these antibodies in solid
tumors.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Under the terms of the Collaboration, we made
an up-front payment of $0.5 million, will make development and sales-based milestone payments up to an aggregate of $164 million,
and will pay a tiered single digit royalty on net sales. The royalty term will terminate on a country by country basis upon the
later of (i) ten years after the first commercial sale of any applicable licensed product in such country, or (ii) the expiration
of the last-to-expire patent held by the Dana Farber Cancer Institute containing a valid claim to any licensed product in such
country.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> Michael Weiss, our
Executive Chairman, CEO and President is also the Executive Vice Chairman of FBIO and the Executive Chairman of Checkpoint
(see Note 9).</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>TGR-1202</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">On September 22, 2014, we exercised our option
to license the global rights to TGR-1202, thereby entering into an exclusive licensing agreement (the “TGR-1202 License”)
with Rhizen Pharmaceuticals, SA (“Rhizen”) for the development and commercialization of TGR-1202. Prior to this, we
had been jointly developing TGR-1202 in a 50:50 joint venture with Rhizen.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Under the terms of the TGR-1202 License, Rhizen
received a $4.0 million cash payment and 371,530 shares of our common stock as an upfront license fee. With respect to TGR-1202,
Rhizen will be eligible to receive regulatory filing, approval and sales-based milestone payments in the aggregate of approximately
$175 million, a small portion of which will be payable on the first New Drug Application (NDA) filing and the remainder on approval
in multiple jurisdictions for up to two oncology indications and one non-oncology indication and attaining certain sales milestones.
In addition, if TGR-1202 is co-formulated with another drug to create a new product (a "New Product"), Rhizen will be
eligible to receive similar regulatory approval and sales-based milestone payments for such New Product. Additionally, Rhizen will
be entitled to tiered royalties on our future net sales of TGR-1202 and any New Product. In lieu of sales milestones and royalties
on net sales, Rhizen shall also be eligible to participate in sublicensing revenue, if any, based on a percentage that decreases
as a function of the number of patients treated in clinical trials following the exercise of the license option. Rhizen will retain
global manufacturing rights to TGR-1202, provided that they are price competitive with alternative manufacturers.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In connection with the TGR-1202 License, we recognized
$4.1 million of noncash research and development expense during the year ended December 31, 2014 related to the issuance of the
above mentioned common stock. In addition, we recognized $4.0 million of other research and development expense during the year
ended December 31, 2014 related to the cash milestone payment.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>IRAK4</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">On June 23, 2014, we entered into an exclusive
licensing agreement with Ligand Pharmaceuticals Incorporated ("Ligand") for the development and commercialization of
Ligand's interleukin-1 receptor associated kinase-4 ("IRAK4") inhibitor technology, which currently is in preclinical
development for potential use against certain cancers and autoimmune diseases. IRAK4 is a serine/threonine protein kinase that
is a key downstream signaling component of the interleukin-1 receptor and multiple toll-like receptors.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Under the terms of the license agreement, Ligand
received 125,000 shares of our common stock as an upfront license fee. Ligand will also be eligible to receive maximum potential
milestone payments of approximately $207 million upon the achievement of specific clinical, regulatory and commercial milestone
events. Additionally, Ligand will be entitled to royalties on our future net sales of licensed products containing IRAK4 inhibitors.
The basic royalty rate for licensed products covered by Ligand's issued patents will be 6% for annual sales of up to $1 billion
and 9.5% for annual sales in excess of that threshold. </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In connection with the license agreement, we
recognized $1,211,250 of noncash research and development expense during the year ended December 31, 2014 in connection with the
issuance of the above mentioned common stock.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Additionally, Opus Point Partners, LLC, who identified
the opportunity and advised us on the transaction, will also be entitled to receive a 1% royalty for annual sales of up to $1 billion.
Michael S. Weiss, our Executive Chairman and Chief Executive Officer, is a Managing Member of Opus Point Partners, LLC.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>TG-1101</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In November 2012, we entered into an exclusive
(within the territory) sublicense agreement with Ildong relating to the development and commercialization of TG-1101 in South Korea
and Southeast Asia. Under the terms of the sublicense agreement, Ildong has been granted a royalty bearing, exclusive right, including
the right to grant sublicenses, to develop and commercialize TG-1101 in South Korea, Taiwan, Singapore, Indonesia, Malaysia, Thailand,
Philippines, Vietnam, and Myanmar.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">An upfront payment of $2.0 million, which was
received in December 2012, <font style="background-color: white">net of $0.3 million of income tax withholdings</font>, is
being recognized as license revenue on a straight-line basis over the life of the agreement, which is through the expiration of
the last licensed patent right or 15 years after the first commercial sale of a product in such country, unless the agreement is
earlier terminated, and represents the estimated period over which we will have certain ongoing responsibilities under the sublicense
agreement. We recorded license revenue of approximately $152,000 for each of the years ended <font style="background-color: white">December
31</font>, 2016, 2015 and 2014, and, at <font style="background-color: white">December 31</font>, 2016, 2015 and 2014, have deferred
revenue of approximately $1,371,000, $1,524,000 and $1,676,000, respectively, associated with this $2,000,000 payment (approximately
$152,000 of which has been classified in current liabilities at December 31, 2016).</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We may receive up to an
additional $5.0 million in payments upon the achievement of pre-specified milestones. In addition, upon commercialization, Ildong
will make royalty payments to us on net sales of TG-1101 in the sublicense territory.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>LFB Biotechnologies</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">On January 30, 2012, we entered into an exclusive
license agreement with LFB Biotechnologies, GTC Biotherapeutics and LFB/GTC LLC, all wholly-owned subsidiaries of LFB Group, relating
to the development of ublituximab (the “LFB License Agreement”). In connection with the LFB License Agreement, LFB
Group was issued 5,000,000 shares of common stock, and a warrant to purchase 2,500,000 shares of common stock at a purchase price
of $0.001 per share. In addition, on November 9, 2012, we nominated Dr. Yann Echelard to our Board of Directors as LFB Group’s
nominee. LFB Group maintains the right to nominate a board member until such time as LFB Group owns less than 10% of the outstanding
common stock.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In connection with the LFB License Agreement,
LFB Group maintained the right to purchase at least $750,000 in additional shares of common stock at a purchase price per share
as defined in a November 2012 securities exchange agreement. Accordingly, in February 2015, LFB Group purchased 114,855 shares
of our common stock at a price of $6.53 per share for net proceeds of $750,000. In May 2015, LFB Group exercised its warrant to
purchase 2,500,000 shares of common stock at a purchase price of $0.001 per share.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Under the terms of the LFB License Agreement,
we utilize LFB Group for certain development and manufacturing services. We incurred approximately $8,100,000, $9,300,000 and $5,200,000
in expenses for such services during the years ended <font style="background-color: white">December 31</font>, 2016, 2015 and 2014,
respectively, which have been included in other research and development expenses in the accompanying consolidated statements of
operations. As of <font style="background-color: white">December 31</font>, 2016, and 2015, we had approximately $0.4 million and
$2.1 million, respectively, recorded in accounts payable related to the LFB License Agreement. In conjunction with the development
and manufacturing services discussed above, certain agreements between us and LFB Group require payments in advance of services
performed or goods delivered. Accordingly, as of December 31, 2016 and 2015, we recorded $1.3 million and $3.0 million, respectively,
in prepaid research and development for such advance payments.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Other Parties</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In March 2014, we entered into a shared services
agreement (the “Opus Shared Services Agreement”) with Opus Point Partners Management, LLC (“Opus”) in which
the parties agreed to share a rented facility and costs for certain other services.  Michael S. Weiss, our Executive Chairman
and CEO, is a Managing Member of Opus. During the years ended <font style="background-color: white">December 31</font>,
2016 and 2015, we incurred expenses of approximately $0.3 million and $0.1 million, respectively, principally for rent, related
to this Opus Shared Services Agreement. As of <font style="background-color: white">December 31</font>, 2016 and 2015, we had $0
and approximately $0.1 million, respectively, recorded in accounts payable related to this Opus Shared Services Agreement. The
Opus Shared Services Agreement is no longer in effect as we began occupying new space in April 2016.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="background-color: white">In October
2014, we entered into an agreement (the “Office Agreement”) with FBIO to occupy approximately 45% of the 24,000
square feet of New York City office space leased by FBIO, which is now our corporate headquarters. The Office Agreement requires
us to pay our respective share of the average annual rent and other costs of the 15-year lease. We approximate an average annual
rental obligation of $1.1 million under the Office Agreement. We began to occupy this new space in April 2016, with rental payments
beginning in the third quarter of 2016. During the year ended December 31, 2016, we recorded rent expense of approximately $1.4
million and</font> at December 31, 2016, have deferred rent of approximately $0.8 million<font style="background-color: white">.
Mr. Weiss, our Executive Chairman and CEO, is also Executive Vice Chairman of FBIO.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">During the year ended December 31, 2016, <font style="background-color: white">we
agreed to pay FBIO $2.2 million for our portion of the build-out costs,</font> which have been allocated to us at the 45% rate
mentioned above. The allocated build-out costs have been recorded in Leasehold Interest on the Company’s consolidated balance
sheet and will be amortized over the 15-year term of the Office Agreement. After an initial commitment period of the 45% rate for
a period of three (3) years, we and FBIO will determine actual office space utilization annually and if our utilization differs
from the amount we have been billed, we will either receive credits or be assessed incremental utilization charges. <font style="background-color: white">Also
in connection with this lease, in October 2014 we pledged $0.6 million to secure a line of credit as a security deposit for the
Office Agreement, which has been recorded as restricted cash in the accompanying consolidated balance sheets.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="background-color: white">In July
2015, we entered into a Shared Services Agreement (the “Shared Services Agreement”) with FBIO to share the cost
of certain services such as facilities use, personnel costs and other overhead and administrative costs. This Shared Services Agreement
requires us to pay our respective share of services utilized. In connection with the Shared Services Agreement, we</font> incurred
expenses of <font style="background-color: white">approximately $0.8 million and $0.1 million for shared services for the years
ended December 31, 2016 and 2015, primarily related to shared personnel. As of December 31, 2016, we had approximately $0.4</font>
million recorded in accounts payable related mostly to the Shared Services Agreement, and no amounts were due at December 31, 2015.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In May 2016, as part of a broader agreement with
Jubilant, an India-based biotechnology company, we entered into the JBET Agreement with Checkpoint, a subsidiary of FBIO, for
the development and commercialization of Jubilant’s novel BET inhibitor program in the field of hematological malignancies.
We paid Checkpoint an up-front licensing fee of $1.0 million as part of the JBET Agreement which was recorded in other research
and development in the accompanying consolidated statement of operations. As of December 31, 2016, we had approximately $0.8 million
recorded in accounts payable, related mostly to the JBET Agreement. Mr. Weiss is also the Executive Chairman of Checkpoint.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">For the year ended December 31, 2016, we incurred
expenses of approximately $4,000 to AOI Communications, L.P. for manuscript services related to TG-1101. Mr. Weiss is the owner
of AOI Communications, L.P.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As of December 31, 2016, we have known
<font style="background-color: white">contractual obligations, commitments and contingencies of approximately $18.0 million related
to our operating lease obligations.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">(in thousands)</font></td>
<td style="line-height: 107%"> </td>
<td colspan="18" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif"><b>Payment due by period</b></font></td>
<td style="line-height: 107%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 107%"> </td>
<td style="line-height: 107%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif"><b>Total</b></font></td>
<td style="line-height: 107%"> </td>
<td style="line-height: 107%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif"><b>Less than 1 year</b></font></td>
<td style="line-height: 107%"> </td>
<td style="line-height: 107%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif"><b>1-3 years</b></font></td>
<td style="line-height: 107%"> </td>
<td style="line-height: 107%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif"><b>3-5 years</b></font></td>
<td style="line-height: 107%"> </td>
<td style="line-height: 107%"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif"><b>More than 5 years</b></font></td>
<td style="line-height: 107%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif"><b>Contractual obligations</b></font></td>
<td style="line-height: 107%"> </td>
<td colspan="2" style="text-align: center; line-height: 107%"> </td>
<td style="line-height: 107%"> </td>
<td style="line-height: 107%"> </td>
<td colspan="2" style="text-align: center; line-height: 107%"> </td>
<td style="line-height: 107%"> </td>
<td style="line-height: 107%"> </td>
<td colspan="2" style="text-align: center; line-height: 107%"> </td>
<td style="line-height: 107%"> </td>
<td style="line-height: 107%"> </td>
<td colspan="2" style="text-align: center; line-height: 107%"> </td>
<td style="line-height: 107%"> </td>
<td style="line-height: 107%"> </td>
<td colspan="2" style="text-align: center; line-height: 107%"> </td>
<td style="line-height: 107%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 50%; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">Operating leases</font></td>
<td style="width: 1%; line-height: 107%"> </td>
<td style="width: 0%; border-bottom: black 1pt solid; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">18,020</font></td>
<td style="width: 1%; line-height: 107%"> </td>
<td style="width: 1%; line-height: 107%"> </td>
<td style="width: 0%; border-bottom: black 1pt solid; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">1,185</font></td>
<td style="width: 1%; line-height: 107%"> </td>
<td style="width: 1%; line-height: 107%"> </td>
<td style="width: 0%; border-bottom: black 1pt solid; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">2,281</font></td>
<td style="width: 1%; line-height: 107%"> </td>
<td style="width: 1%; line-height: 107%"> </td>
<td style="width: 0%; border-bottom: black 1pt solid; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">2,286</font></td>
<td style="width: 1%; line-height: 107%"> </td>
<td style="width: 1%; line-height: 107%"> </td>
<td style="width: 0%; border-bottom: black 1pt solid; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">12,268</font></td>
<td style="line-height: 107%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">    <b>Total</b></font></td>
<td style="line-height: 107%"> </td>
<td style="border-bottom: black 1.5pt double; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">18,020</font></td>
<td style="line-height: 107%"> </td>
<td style="line-height: 107%"> </td>
<td style="border-bottom: black 1.5pt double; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">1,185</font></td>
<td style="line-height: 107%"> </td>
<td style="line-height: 107%"> </td>
<td style="border-bottom: black 1.5pt double; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">2,281</font></td>
<td style="line-height: 107%"> </td>
<td style="line-height: 107%"> </td>
<td style="border-bottom: black 1.5pt double; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">2,286</font></td>
<td style="line-height: 107%"> </td>
<td style="line-height: 107%"> </td>
<td style="border-bottom: black 1.5pt double; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right; line-height: 107%"><font style="font: 8pt Times New Roman, Times, Serif">12,268</font></td>
<td style="line-height: 107%"> </td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"><font style="background-color: white"> <b>Leases</b></font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="background-color: white">See
Note 9 for a detailed description of our lease arrangements. Total rental expense was approximately $1.6 million, $0.3 million
and $0.1 million for the years ended December 31, 2016, 2015 and 2014, respectively. </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="background-color: white">Future
minimum lease commitments as of December 31, 2016, in the aggregate total approximately $18.0 million through December 31,
2031. The preceding table shows future minimum lease commitments, which include our office leases in New York, North Carolina and
Tennessee, by period as of December 31, 2016.</font></p>
<p style="font: 11pt/107% Calibri, Helvetica, Sans-Serif; margin: 0 0 8pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>3 Months Ended</b> </font><br />
<br /></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>March 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>June 30, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>September 30, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">License revenue</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">38,095</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">38,095</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">38,096</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">38,095</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total costs and expenses</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">14,030,251</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">16,061,538</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">24,963,567</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">24,066,153</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Net loss</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(13,848,662</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(15,899,062</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(24,831,027</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(23,674,143</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Basic and diluted net loss per common share</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(0.28</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(0.33</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(0.50</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(0.48</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>3 Months Ended</b>  </font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>March 31, 2015</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>June 30, 2015</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>September 30, 2015</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2015</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">License revenue</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">38,095</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">38,095</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">38,096</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">38,095</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total costs and expenses</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">14,640,946</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">17,149,675</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">13,863,680</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">17,678,096</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Net loss</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(14,577,735</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(17,103,183</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(13,655,916</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(17,611,812</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Basic and diluted net loss per common share</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(0.35</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(0.38</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(0.28</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(0.37</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We are a biopharmaceutical company focused
on the acquisition, development and commercialization of novel treatments for B-cell malignancies and autoimmune diseases. Currently,
the Company is developing two therapies targeting hematologic malignancies. TG-1101 (ublituximab) is a novel, glycoengineered monoclonal
antibody that targets a specific and unique epitope on the CD20 antigen found on mature B-lymphocytes. We are also developing TGR-1202,
an orally available PI3K delta inhibitor. The delta isoform of PI3K is strongly expressed in cells of hematopoietic origin and
is believed to be important in the proliferation and survival of B-lymphocytes. Both TG-1101 and TGR-1202 are in clinical development
for patients with hematologic malignancies. The Company also has pre-clinical programs to develop IRAK4 (interleukin-1 receptor-associated
kinase 4) inhibitors, BET (Bromodomain and Extra Terminal) inhibitors, and anti-PD-L1 and anti-GITR antibodies.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We also actively evaluate complementary
products, technologies and companies for in-licensing, partnership, acquisition and/or investment opportunities. To date, we have
not received approval for the sale of any of our drug candidates in any market and, therefore, have not generated any product sales
from our drug candidates.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">We
have incurred operating losses since our inception, and expect to continue to incur operating losses for the foreseeable future
and may never become profitable. As of December 31, 2016, we have an accumulated deficit of $236.4 million.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Our
major sources of cash have been proceeds from the private placement and public offering of equity securities. We have not yet
commercialized any of our drug candidates and cannot be sure if we will ever be able to do so. Even if we commercialize one or
more of our drug candidates, we may not become profitable. Our ability to achieve profitability depends on many factors, including
our ability to obtain regulatory approval for our drug candidates; successfully complete any post-approval regulatory obligations;
and successfully commercialize our drug candidates alone or in partnership. We may continue to incur substantial operating losses
even if we begin to generate revenues from our drug candidates.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">As
of December 31, 2016, we had $45.0 million in cash and cash equivalents, investment securities, and interest receivable. The Company
believes its cash, cash equivalents, investment securities, and interest receivable on hand as of December 31, 2016 combined with
the additional capital raised in the first quarter of 2017 (see Note 13) will be sufficient to fund the Company’s planned
operations for approximately the next 24 months. The actual amount of cash that we will need to operate is subject to many factors,
including, but not limited to, the timing, design and conduct of clinical trials for our drug candidates. We are dependent upon
significant future financing to provide the cash necessary to execute our current operations, including the commercialization
of any of our drug candidates</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Our
common stock is quoted on the Nasdaq Capital Market and trades under the symbol “TGTX.”</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In January 2017, the Financial Accounting
Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2017-04, “Simplifying the Test
for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 removes the requirement to compare the implied fair value
of goodwill with its carrying amount as part of step 2 of the goodwill impairment test. As a result, under ASU 2017-04, an entity
should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying
amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s
fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition,
ASU 2017-04:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 40pt">● Clarifies the requirements for excluding
and allocating foreign currency translation adjustments to reporting units in connection with an entity’s testing of reporting
units for goodwill impairment.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 40pt">● Clarifies that an entity should consider
income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment
loss, if applicable.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 40pt">● Makes minor changes to the overview and background
sections of certain Accounting Standards Codification (“ASC” or “Codification”) subtopics and topics as
part of the Board’s initiative to unify and improve those sections throughout the Codification.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">ASU 2017-04 is effective prospectively
for annual and interim periods beginning on or after December 15, 2019, and early adoption is permitted on testing dates after
January 1, 2017. We are currently evaluating the impact the adoption of ASU 2017-04 will have on our consolidated financial statements.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In November 2016, the FASB issued ASU
2016-18, “Restricted Cash – a consensus of the FASB Emerging Issues Task Force” (“ASU 2016-18”).
ASU 2016-18 amends ASC 230 to add or clarify guidance on the classification and presentation of restricted cash in the statement
of cash flows. Key requirements of the ASU are as follows:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 40pt">● An entity should include in its cash and
cash-equivalent balances in the statement of cash flows those amounts that are deemed to be restricted cash and restricted cash
equivalents. The ASU does not define the terms “restricted cash” and “restricted cash equivalents” but
states that an entity should continue to provide appropriate disclosures about its accounting policies pertaining to restricted
cash in accordance with other GAAP. The ASU also states that any change in accounting policy will need to be assessed under ASC
250.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 40pt">● A reconciliation between the statement of
financial position and the statement of cash flows must be disclosed when the statement of financial position includes more than
one line item for cash, cash equivalents, restricted cash, and restricted cash equivalents.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 40pt">● Changes in restricted cash and restricted
cash equivalents that result from transfers between cash, cash equivalents, and restricted cash and restricted cash equivalents
should not be presented as cash flow activities in the statement of cash flows.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 40pt">● An entity with a material balance of amounts
generally described as restricted cash and restricted cash equivalents must disclose information about the nature of the restrictions.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 40pt; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">ASU 2016-18 is effective for annual and
interim periods beginning after December 15, 2017, and early adoption is permitted for all entities. We are currently evaluating
the impact the adoption of ASU 2016-18 will have on our consolidated financial statements.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In August 2016, the
FASB issued ASU No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”).
ASU 2016-15 amends the guidance in ASC 230 on the classification of certain cash receipts and payments in the statement of cash
flows. The primary purpose of ASU 2016-15 is to reduce the diversity in practice that has resulted from the lack of consistent
principles on this topic. The amendments in ASU 2016-15 add or clarify guidance on eight cash flow issues:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 40pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 40pt">● Debt prepayment or debt extinguishment costs.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 40pt">● Settlement of zero-coupon debt instruments
or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 40pt">● Contingent consideration payments made after
a business combination.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 40pt">● Proceeds from the settlement of insurance
claims.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 40pt">● Proceeds from the settlement of corporate-owned
life insurance policies, including bank-owned life insurance policies.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 40pt">● Distributions received from equity method
investees.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 40pt">● Beneficial interests in securitization transactions.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 40pt">● Separately identifiable cash flows and application
of the predominance principle.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">ASU 2016-15 is effective for annual and
interim periods beginning after December 15, 2017, and early adoption is permitted for all entities. Entities must apply the guidance
retrospectively to all periods presented but may apply it prospectively from the earliest date practicable if retrospective application
would be impracticable. The provisions of this standard are not expected to significantly impact the Company.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In May 2016, the
FASB issued ASU No. 2016-11, “Rescission of SEC Guidance Because of Accounting Standards Update 2014-09 and 2014-16 Pursuant
to Staff Announcements at the March 3, 2016 EITF Meeting” (“ASU 2016-11”). ASU 2016-11 rescinds certain SEC guidance
from the FASB Codification in response to announcements made by the SEC staff at the Emerging Issues Task Force’s March 3,
2016 meeting. Specifically, ASU 2016-11 supersedes SEC observer comments on the following topics:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 40pt">● Upon the adoption of ASU 2014-09:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 60pt">o Revenue and expense recognition for freight services
in process (ASC 605-20-S99-2)</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 60pt">o Accounting for shipping and handling fees and costs
(ASC 605-45-S99-1)</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 60pt">o Accounting for consideration given by a vendor
to a customer (ASC 605-50-S99-1)</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 60pt">o Accounting for gas-balancing arrangements (ASC
932-10-S99-5)</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 40pt">● Upon the adoption of ASU 2014-16:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 60pt">o Determining the nature of a host contract related
to a hybrid financial instrument issued in the form of a share under ASC 815 (ASC 815-10-S99-3).</p>
<p style="font: 12pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">ASU 2016-11 is effective
upon the adoption of ASU 2014-09 and ASU 2014-16. The adoption of ASU 2016-11 is not expected to have a material impact on the
Company’s consolidated financial statements.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In March 2016, the FASB issued ASU No.
2016-09, “Simplifying the Accounting for Share-Based Payments” (“ASU 2016-09”). ASU 2016-09 simplifies
several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including
the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement
of cash flows. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods
within those annual reporting periods. The provisions of this standard are not expected to significantly impact the Company.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In February 2016, the FASB issued ASU
No. 2016-02, “Leases (Topic 842),” which requires lessees to recognize assets and liabilities for the rights and obligations
created by most leases on their balance sheet. The guidance is effective for fiscal years beginning after December 15, 2018, including
interim periods within those fiscal years. Early application is permitted. ASU 2016-02 requires modified retrospective adoption
for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief.
The Company is currently evaluating the impact the standard may have on its consolidated financial statements and related disclosures.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In August 2014, the FASB issued ASU No.
2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40)”, which will require management to
assess an entity’s ability to continue as a going concern at each annual and interim period. Related footnote disclosures
will be required if conditions give rise to substantial doubt about an entity’s ability to continue as a going concern within
one year of the report issuance date. If conditions do not give rise to substantial doubt, no disclosures will be required specific
to going concern uncertainties. The guidance defines substantial doubt using a likelihood threshold of “probable” similar
to the current use of that term in U.S. GAAP for loss contingencies and provides example indicators. The guidance is effective
for reporting periods ending after December 15, 2016, and early adoption is permitted. Therefore, the Company has adopted this new standard on December 15, 2016. The adoption of this standard did not have a material impact on our consolidated
financial statements as of December 31, 2016.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Other pronouncements issued by the FASB
or other authoritative accounting standards group with future effective dates are either not applicable or not significant to our
consolidated financial statements.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The preparation of financial statements
in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and
judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and expenses during the applicable reporting period.
Actual results could differ from those estimates. Such differences could be material to the financial statements.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We treat liquid investments with original
maturities of less than three months when purchased as cash and cash equivalents.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We record cash pledged or held in trust
as restricted cash. As of December 31, 2016, we have approximately $0.6 million of restricted cash pledged to secure a line of
credit as a security deposit for an Office Agreement (see Note 9).</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Investment securities at December 31,
2016 consist of short-term government securities and at December 31, 2015 consist of short-term and long-term government securities.
We classify these securities as held-to-maturity. Held-to-maturity securities are those securities in which we have the ability
and intent to hold the security until maturity. Held-to-maturity securities are recorded at amortized cost, adjusted for the amortization
or accretion of premiums or discounts. Premiums and discounts are amortized or accreted over the life of the related held-to-maturity
security as an adjustment to yield using the effective interest method.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">A decline in the market value of any investment
security below cost, that is deemed to be other than temporary, results in a reduction in the carrying amount to fair value. The
impairment is charged to operations and a new cost basis for the security is established. Other-than-temporary impairment charges
are included in interest and other income (expense), net. Unrealized gains, if determined to be temporary, are included in accumulated
other comprehensive income in equity. Dividend and interest income are recognized when earned.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Financial instruments that potentially
subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and short-term investments.
The Company maintains its cash and cash equivalents with high-credit quality financial institutions. At times, such amounts may
exceed federally-insured limits.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We recognize license revenue in accordance
with the revenue recognition guidance of the FASB Accounting Standards Codification, or Codification. We analyze each element of
our licensing agreement to determine the appropriate revenue recognition. The terms of the license agreement may include payments
to us of non-refundable up-front license fees, milestone payments if specified objectives are achieved, and/or royalties on product
sales. We recognize revenue from upfront payments over the period of significant involvement under the related agreements unless
the fee is in exchange for products delivered or services rendered that represent the culmination of a separate earnings process
and no further performance obligation exists under the contract. We recognize milestone payments as revenue upon the achievement
of specified milestones only if (1) the milestone payment is non-refundable, (2) substantive effort is involved in achieving
the milestone, (3) the amount of the milestone is reasonable in relation to the effort expended or the risk associated with
achievement of the milestone, and (4) the milestone is at risk for both parties. If any of these conditions are not met, we
defer the milestone payment and recognize it as revenue over the estimated period of performance under the contract.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Generally, research and development costs
are expensed as incurred. Nonrefundable advance payments for goods or services that will be used or rendered for future research
and development activities are deferred and amortized over the period that the goods are delivered or the related services are
performed, subject to an assessment of recoverability. We make estimates of costs incurred in relation to external clinical research
organizations, or CROs, and clinical site costs. We analyze the progress of clinical trials, including levels of patient enrollment,
invoices received and contracted costs when evaluating the adequacy of the amount expensed and the related prepaid asset and accrued
liability. Significant judgments and estimates must be made and used in determining the accrued balance and expense in any accounting
period. We review and accrue CRO expenses and clinical trial study expenses based on work performed and rely upon estimates of
those costs applicable to the stage of completion of a study. Accrued CRO costs are subject to revisions as such trials progress
to completion. Revisions are charged to expense in the period in which the facts that give rise to the revision become known. With
respect to clinical site costs, the financial terms of these agreements are subject to negotiation and vary from contract to contract.
Payments under these contracts may be uneven, and depend on factors such as the achievement of certain events, the successful recruitment
of patients, the completion of portions of the clinical trial or similar conditions. The objective of our policy is to match the
recording of expenses in our financial statements to the actual services received and efforts expended. As such, expense accruals
related to clinical site costs are recognized based on our estimate of the degree of completion of the event or events specified
in the specific clinical study or trial contract.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Prepaid research and development in our
consolidated balance sheets includes, among other things, certain fees related to development and manufacturing services. These
development and manufacturing agreements often require payments in advance of services performed or goods received. Accordingly,
as of December 31, 2016 and 2015, we recorded approximately $5.7 million and $9.2 million, respectively, in prepaid research and
development related to such advance agreements.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Income taxes are accounted for under the
asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to
temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective
tax bases, operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes
the enactment date. If the likelihood of realizing the deferred tax assets or liability is less than “more likely than not,”
a valuation allowance is then created.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We, and our subsidiaries, file income
tax returns in the U.S. Federal jurisdiction and in various states. We have tax net operating loss carryforwards that are subject
to examination for a number of years beyond the year in which they were generated for tax purposes. Since a portion of these net
operating loss carryforwards may be utilized in the future, many of these net operating loss carryforwards will remain subject
to examination. We recognize interest and penalties related to uncertain income tax positions in income tax expense.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">We recognize all share-based payments
to employees and non-employee directors (as compensation for service) as noncash compensation expense in the consolidated financial
statements based on the fair values of such payments. Stock-based compensation expense recognized each period is based on the value
of the portion of share-based payment awards that is ultimately expected to vest during the period. Forfeitures are estimated at
the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">For share-based payments to consultants
and other third-parties (including related parties), noncash compensation expense is determined at the “measurement date.”
The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation
expense remains uncertain. We record compensation expense based on the fair value of the award at the reporting date. The awards
to consultants and other third-parties (including related parties) are then revalued, or the total compensation is recalculated
based on the then current fair value, at each subsequent reporting date.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In addition, because some of the options,
restricted stock and warrants issued to employees, consultants and other third-parties vest upon achievement of certain milestones,
the total expense is uncertain. Compensation expense for such awards that vest upon the achievement of milestones is recognized
when the achievement of such milestone becomes probable.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Basic
net loss per common share is calculated by dividing net loss applicable to common shares by the weighted-average number of common
shares outstanding for the period. Diluted net loss per common share is the same as basic net loss per common share, since potentially
dilutive securities from stock options, stock warrants and convertible notes would have an antidilutive effect either because
the Company incurred a net loss during the period presented or because such potentially dilutive securities were out of the money
and the Company realized net income during the period presented. The amounts of potentially dilutive securities excluded from
the calculation were 8,033,779, 7,064,396 and 8,890,796 at December 31, 2016, 2015 and 2014, respectively. During the years ended
December 31, 2016, 2015 and 2014 the Company incurred a net loss, therefore, all of the securities are antidilutive and excluded
from the computation of diluted loss per share</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="10" style="text-align: center; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"><b>December
31,</b></font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt/107% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2016</b></font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt/107% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2015</b></font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt/107% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2014</b></font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="width: 64%; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Unvested
restricted stock</font></td>
<td style="width: 1%; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 0%; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; text-align: right; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">7,142,055</font></td>
<td style="width: 1%; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 0%; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; text-align: right; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">5,859,914</font></td>
<td style="width: 1%; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 0%; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; text-align: right; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">4,725,001</font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Warrants</font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">876,912</font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">1,186,749</font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">4,148,228</font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Shares
issuable upon note conversion</font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">14,812</font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">17,733</font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">17,373</font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Options</font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt/107% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">--</font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt/107% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">--</font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt/107% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">194</font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Total</font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt double; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt double; font: 8pt/107% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">8,033,779</font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt double; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt double; font: 8pt/107% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">7,064,396</font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt double; font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt double; font: 8pt/107% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">8,890,796</font></td>
<td style="font: 8pt/107% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Long-lived assets are reviewed for an
impairment loss when circumstances indicate that the carrying value of long-lived tangible and intangible assets with finite lives
may not be recoverable. Management’s policy in determining whether an impairment indicator, a triggering event, exists comprises
measurable operating performance criteria as well as qualitative measures. If an analysis is necessitated by the occurrence of
a triggering event, we make certain assumptions in determining the impairment amount. If the carrying amount of an asset exceeds
its estimated future cash flows, an impairment charge is recognized.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Goodwill is reviewed for impairment annually,
or when events arise that could indicate that an impairment exists. We test for goodwill impairment using a two-step process. The
first step compares the fair value of the reporting unit with the unit's carrying value, including goodwill. When the carrying
value of the reporting unit is greater than fair value, the unit’s goodwill may be impaired, and the second step must be
completed to measure the amount of the goodwill impairment charge, if any. In the second step, the implied fair value of the reporting
unit’s goodwill is compared with the carrying amount of the unit’s goodwill. If the carrying amount is greater than
the implied fair value, the carrying value of the goodwill must be written down to its implied fair value. We will continue to
perform impairment tests annually, at December 31, and whenever events or changes in circumstances suggest that the carrying value
of an asset may not be recoverable.</p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2015</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 72%"><font style="font-size: 8pt">Money market funds</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 11%; text-align: right"><font style="font-size: 8pt">20,978,947</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 11%; text-align: right"><font style="font-size: 8pt">8,265,583</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Checking and bank deposits</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">4,052,333</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">46,795,746</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">    Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">25,031,280</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">55,061,329</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Amortized cost, as adjusted</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Gross unrealized holding gains</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Gross unrealized holding losses</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Estimated fair value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Short-term investments:</font></td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">Obligations of domestic governmental agencies (maturing between February 2017 and September 2017) (held-to-maturity)</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">19,853,860</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">3,270</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2,492</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">19,854,638</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">    Total short-term investment securities</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">19,853,860</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">3,270</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">2,492</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">19,854,638</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2015</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Amortized cost, as adjusted</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><p style="margin-top: 0; margin-bottom: 0"><font style="font-size: 8pt"><b>Gross</b></font></p>
<p style="margin-top: 0; margin-bottom: 0"><font style="font-size: 8pt"><b> unrealized holding gains</b></font></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Gross unrealized holding losses</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Estimated fair value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Short-term investments:</font></td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">Obligations of domestic governmental agencies (maturing between January 2016 and December 2016) (held-to-maturity)</font></td>
<td style="width: 1%"> </td>
<td style="width: 0%"><font style="font-size: 8pt">  $</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">$22,166,512</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 0%"><font style="font-size: 8pt">  $</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 0%"><font style="font-size: 8pt">  $</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">$22,822</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 0%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">$22,143,690</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Long-term investments:</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Obligations of domestic governmental agencies (maturing between January 2017 and December 2017) (held-to-maturity)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">25,003,032</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">85,846</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">24,917,186</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">    Total short-term and long-term investment securities</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">  $</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">47,169,544</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">  $</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">  $</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">108,668</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">  $</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">47,060,876</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Financial liabilities at fair value as of December 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 1</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 2</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 3</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">5% Notes</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">    Totals</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Financial liabilities at fair value as of December 31, 2015</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 1</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 2</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 3</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">5% Notes</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">211,549</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">211,549</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">    Totals</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">211,549</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">211,549</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="width: 88%"><font style="font-size: 8pt">Balance at January 1, 2015</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">  $</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">275,190</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">     Interest accrued on face value of 5% Notes</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">972,736</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">     Conversion of 5% Notes</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(6,924</font></td>
<td><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">     Change in fair value of Level 3 liabilities</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(1,029,453</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Balance at December 31, 2015</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">211,549</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">     Interest accrued on face value of 5% Notes</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">886,084</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">     Conversion of 5% Notes</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(33,017</font></td>
<td><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">     Change in fair value of Level 3 liabilities</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(995,741</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Balance at December 31, 2016</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">  $</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Number</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>of shares</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted-</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>average</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>exercise price</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted-</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>average</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>contractual term</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Aggregate intrinsic value</b></p></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>(in years)</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">Outstanding at January 1, 2014</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 9%; padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">46,591</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">46.37</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 9%; padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">8.50</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(46,000</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">4.40</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Forfeited</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expired</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(397</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">4,457.57</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at December 31, 2014</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">194</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">971.70</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">3.50</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Forfeited</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(152</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">463.32</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expired</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(42</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">2,811.53</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at December 31, 2015</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Forfeited</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expired</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at December 31, 2016</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercisable at December 31, 2016</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Number of Shares</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted Average Grant Date Fair Value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Outstanding at January 1, 2014</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">7,034,957</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">4.60</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">982,793</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">13.55</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Vested</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(1,616,749</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">6.53</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Forfeited</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(1,000</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">6.60</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at December 31, 2014</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">6,400,001</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">5.86</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,992,535</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">12.89</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Vested</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(1,001,455</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">5.04</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Forfeited</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(31,166</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">16.76</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at December 31, 2015</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">7,359,915</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">7.83</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,924,639</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">4.99</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Vested</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(595,726</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">7.38</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Forfeited</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(46,773</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">10.34</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at December 31, 2016</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">8,642,055</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">7.20</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Warrants</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted-</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>average</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>exercise price</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Aggregate intrinsic value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 64%"><font style="font-size: 8pt">Outstanding at January 1, 2014</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 9%; padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">5,718,947</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">1.34</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">14,809,030</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Issued</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(1,560,826</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2.28</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expired</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(9,893</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">20.74</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at December 31, 2014</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">4,148,228</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">0.94</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">61,792,184</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Issued</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(2,950,115</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">0.36</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expired</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(11,364</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">2.25</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at December 31, 2015</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">1,186,749</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">2.37</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">11,341,452</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Issued</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(273,370</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2.26</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expired</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(36,467</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">2.25</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at December 31, 2016</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">876,912</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">2.41</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">1,961,403</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt"><b>2015</b></font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt">  <b>2014</b></font></td>
<td style="vertical-align: bottom"> </td>
<td colspan="4"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 64%"><font style="font-size: 8pt">Stock-based compensation expense associated with restricted stock</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">$7,509,999</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">$15,697,092</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">$20,726,512</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Stock-based compensation expense associated with stock options</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">378,780</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">$7,509,999</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">$15,697,092</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">$21,105,292</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31, 2016</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31, 2015</b></p></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Non-current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Non-current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 40%"><font style="font-size: 8pt">Convertible 5% Notes Payable</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">211,549</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">211,549</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">  Totals</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">211,549</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">211,549</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2015</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Deferred tax assets (liabilities):</font></td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Net operating loss carryforwards</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">95,329,928</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">68,700,379</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Research and development credit</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">7,326,715</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">4,962,298</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Noncash compensation</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">12,915,672</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">12,087,968</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Other</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">599,514</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">608,205</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Deferred tax asset, excluding valuation allowance</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">116,171,829</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">86,358,850</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Less valuation allowance</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(116,171,829</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(86,358,850</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Net deferred tax assets</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>For the year ended December 31,</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2015</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2014</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 64%"><font style="font-size: 8pt">Loss before income taxes, as reported in the consolidated statements of operations</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 0%; border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(78,252,894</font></td>
<td style="width: 1%; padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 0%; border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(62,948,646</font></td>
<td style="width: 1%; padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 0%; border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(55,781,277</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Computed “expected” tax benefit</font></td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">(26,605,984</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">(21,402,540</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">(18,965,634</font></td>
<td><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Increase (decrease) in income taxes resulting from:</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">  Expected benefit from state and local taxes</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(835,072</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(672,306</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(2,533,156</font></td>
<td><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">  Research and development credits</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(2,364,417</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(1,603,364</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(1,092,767</font></td>
<td><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">  Other</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(7,506</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">566,310</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">35,459</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">  Permanent difference related to contingent note payable</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(244,814</font></td>
<td><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">  Impact of change in state tax rates on deferred taxes</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">5,836,819</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">  Change in the balance of the valuation allowance for deferred tax assets</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">29,812,979</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">17,275,081</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">22,800,912</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">(in thousands)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="18" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Payment due by period</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Less than 1 year</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>1-3 years</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>3-5 years</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>More than 5 years</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt"><b>Contractual obligations</b></font></td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 50%"><font style="font-size: 8pt">Operating leases</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">18,020</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,185</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2,281</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2,286</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">12,268</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">    <b>Total</b></font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">18,020</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">1,185</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">2,281</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">2,286</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">12,268</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>3 Months Ended</b> </font><br />
<br /></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>March 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>June 30, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>September 30, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">License revenue</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">38,095</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">38,095</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">38,096</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">38,095</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total costs and expenses</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">14,030,251</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">16,061,538</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">24,963,567</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">24,066,153</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Net loss</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(13,848,662</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(15,899,062</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(24,831,027</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(23,674,143</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Basic and diluted net loss per common share</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(0.28</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(0.33</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(0.50</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(0.48</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
</table>
<p style="margin-top: 0; margin-bottom: 0"> </p>
<p style="margin-top: 0; margin-bottom: 0"></p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>3 Months Ended</b>  </font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>March 31, 2015</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>June 30, 2015</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>September 30, 2015</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2015</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">License revenue</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">38,095</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">38,095</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">38,096</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">38,095</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total costs and expenses</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">14,640,946</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">17,149,675</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">13,863,680</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">17,678,096</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Net loss</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(14,577,735</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(17,103,183</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(13,655,916</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(17,611,812</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Basic and diluted net loss per common share</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(0.35</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(0.38</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(0.28</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">(0.37</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
</table>
<p style="margin-top: 0; margin-bottom: 0"></p>
56908544
221001116
-33042
0
0
816257
0
0
12589219
0
0
816257
0
2042281
0
-2042281
0
0
0
6
-6
20978947
8265583
4052333
46795746
2492
108668
2492
22822
85846
3270
0
3270
0
0
19853860
47169544
19853860
22166512
25003032
19854638
47060876
19854638
22143690
24917186
68875
211549
0
0
68875
0
0
211549
68875
211549
0
0
68875
0
0
211549
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33017
6924
886084
972736
68875
211549
275190
696172
0
46591
194
0
2477958
0
397
42
0
0
152
0
46000
0
0
0
0
0
0
46.37
971.7
0
0
4457.57
2811.53
0
0
463.32
0
4.4
0
0
0
0
0
P0Y
P8Y6M
P3Y6M
P0Y
P3Y6M
P0Y
0
0
0
0
0
0
6400001
7034957
7359915
8642055
1000
46773
31166
1616749
595726
1001455
982793
1924639
1992535
5.86
4.6
7.83
7.2
6.6
10.34
16.76
6.53
7.38
5.04
13.55
4.99
12.89
876912
1186749
4148228
5718947
36467
9893
11364
273370
1560826
2950115
0
0
0
2.41
2.37
0.94
1.34
2.25
20.74
2.25
2.26
2.28
0.36
0
0
0
7509999
21105292
15697092
20726512
7509999
15697092
378780
378780
0
378780
7509999
20726512
15697092
20726512
7509999
15697092
68875
211549
68875
211549
0
0
0
0
12915672
12087968
7326715
4962298
95329928
68700379
599514
608205
116171829
86358850
0
0
116171829
86358850
-78252894
-55781277
-62948646
-26605984
-18965634
-21402540
-835072
-2533156
-672306
0
0
0
300000
29812979
22800912
17275081
0
0
5836819
0
-244814
0
-7506
35459
566310
2364417
1092767
1603364
-13848662
-15899062
-24831027
-23674143
-14577735
-17103183
-13655916
-17611812
38095
38095
38096
38095
38095
38095
38096
38095
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="10" style="text-align: center"><font style="font-size: 8pt"><b>December 31,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2015</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2014</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 64%"><font style="font-size: 8pt">Unvested restricted stock</font></td>
<td style="width: 1%"> </td>
<td style="width: 0%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">7,142,055</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 0%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">5,859,914</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 0%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">4,725,001</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Warrants</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">876,912</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,186,749</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">4,148,228</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Shares issuable upon note conversion</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">14,812</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">17,733</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">17,373</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Options</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">194</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">8,033,779</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">7,064,396</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">8,890,796</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
8033779
8890796
7064396
4725001
7142055
5859914
876912
14812
0
1186749
17733
0
4148228
17373
194
1185000
1185000
2281000
2281000
2286000
2286000
12268000
12268000
1371000
1524000
1676000
1829000
2000000
271828000
16700000
19900000
16700000
19900000
7.88
10.31
P1Y7M6D
1600000
100000
300000
18020000
18020000
1100000
5678755
9151142
1300000
3000000
5200000
9300000
300000
4000
8100000
100000
800000
100000
400000
2100000
0
100000
800000
400000
66489820
26004687
43445817
4000000
18800000000
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">On January 6, 2017, a purported securities class
action complaint was filed in New York federal court against the Company and certain of its directors, officers or consultants
on behalf of all shareholders who purchased or otherwise acquired TG Therapeutics common stock between September 15, 2014 and October
12, 2016 (the “Class Period”). The case is captioned John Lyon v. TG Therapeutics, Michael S. Weiss, Sean A. Power
and Robert Niecestro, Case No. 1:17-cv-00112-VM (S.D.N.Y.). The complaint alleges that, throughout the Class Period and including
on October 13, 2016, that the Company had filed an “amended protocol for its GENUINE Phase 3 trial,” various statements
made by the Company regarding its GENUINE Phase 3 trial were materially false or misleading when made in violation of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On January 24, 2017, a second purported class action complaint was
filed in New York federal court against the Company and certain of its directors, officers or consultants also on behalf of all
shareholders who purchased or otherwise acquired TG Therapeutics common stock between September 15, 2014 and October 12, 2016.
The case is captioned Kenneth C. Wyzgoski v. TG Therapeutics, Michael S. Weiss, Sean A. Power and Robert Niecestro, Case No. 1:17-cv-00508-VM
(S.D.N.Y.). The claims and allegations in the Wyzgoski complaint are substantially identical to those in the Lyon case. Both actions
remain pending and are in the early stages of litigation.<b>	</b></p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 40pt"><font style="font: 8pt Times New Roman, Times, Serif; background-color: white">During
the first quarter of 2017, we sold a total of 3,104,253 shares of common stock under the 2015 ATM for aggregate total gross proceeds
of approximately $31.6 million at an average selling price of $10.18 per share. Net proceeds were approximately $31 million after
deducting commissions and other transactions costs.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">On
March 9, 2017, we announced the pricing of an underwritten public offering of 5,128,206 shares of our common stock (plus a 30-day
underwriter option to purchase up to an additional 769,230 shares of common stock, which has been exercised) at a price of $9.75 per
share, with expected gross proceeds to TG Therapeutics of $57.5 million, less underwriting discounts and commissions.
Total net proceeds from this offering, including the overallotment, are $54 million, net of underwriting discounts and estimated
offering expenses of approximately $3.5 million. The shares were sold under a shelf registration statement on Form S-3 (File No.
333-201339) that was previously filed and declared effective by the SEC in January 2015. The offering closed on March 14, 2017. </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0pt; font: 8pt Times New Roman, Times, Serif"></p>
600000
P24M
5700000
9200000
1961403
11341452
61792184
14809030
100
1125
1125
0.50
0.05
0.05
0.05
7300000
0.34
177000000
0.06
0.01
0.06
1000000000
0.05
P5Y
175000000
250000000
75000000
50000000
0.03
15500000
2000000
207000000
4000000
4100000
371530
25000
114855
6.53
750000
4400000
67000000
48900000
4500000
68200000
50000000