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<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Note 1. Basis of Presentation, Summary of Significant Accounting Policies, and Nature of Operations</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company was formed on October 6, 2006, when Thorium Power, Ltd. merged with Thorium Power, Inc., (“TPI”), which had been formed in the State of Delaware on January 8, 1992. On September 29, 2009, we changed our name from Thorium Power, Ltd. to Lightbridge Corporation (subsequently referred to as "we" or the "Company"). We are engaged in two operating business segments: our Technology Business Segment and our Consulting Business Segment (see Note 12-Business Segment Results).</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Going Concern</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
We have incurred recurring losses since inception and expect to continue to incur losses as a result of costs and expenses related to our research and continued development of our nuclear fuel and our corporate general and administrative expenses. Our limited capital resources and operations to date have been funded through sales of our equity securities. As of December 31, 2015, we had working capital of approximately $0.1
million, cash of approximately $0.6
million, stockholders’ deficit of approximately $1.5
million and an accumulated deficit of approximately $74.4
million. As a result, there is substantial doubt about our ability to continue as a going concern. In the event that we are unable to generate sufficient cash from our operating activities or raise additional funds, we may be required to delay, reduce or severely curtail our operations or otherwise impede our on-going business efforts, which could have a material adverse effect on our business, operating results, financial condition and long-term prospects. The Company expects to seek to obtain additional funding through future equity issuances. There can be no assurance as to the availability or terms upon which such financing and capital might be available.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Technology Business Segment</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Our primary business segment, based on future revenue potential, is to develop and commercialize innovative, proprietary nuclear fuel designs which we expect will significantly enhance the nuclear power industry’s economics due to higher power output and improve safety margins.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
We are currently focusing our development efforts primarily on the metallic fuel with a power uprate of up to
10% and a
24
-month operating cycle in existing Westinghouse-type four-loop pressurized water reactors. Those reactors represent the largest segment of our global target market. Our metallic fuel could also be adapted for use in other types of water-cooled commercial power reactors, such as boiling water reactors, CANDU heavy water reactors, as well as water-cooled small modular reactors.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">On September 9, 2015, we entered into a Comprehensive Nuclear Services Agreement with Canadian Nuclear Laboratories (CNL) for fabrication of Lightbridge's patented next generation metallic nuclear fuel test samples at CNL facilities at Chalk River, Ontario, Canada. This enabling agreement provides the framework to proceed with Phases 2 and 3 of the test fuel sample fabrication at CNL's facilities in Chalk River as envisioned in an October 2014 Initial Cooperation Agreement. The initial scope of work under the comprehensive nuclear services agreement involves development of a fabrication plan in 2015. Subsequent activities will include fabrication and characterization in early 2016 of prototype fuel test samples using depleted uranium, to be followed by fabrication in late 2016 of irradiation fuel test samples using low enriched uranium for loop irradiation testing under prototypic commercial reactor operating conditions in a pressurized water loop of the 25 MW nuclear research reactor operated by the Institute for Energy Technology (“IFE”) at Halden, Norway.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">On July 8, 2015 we entered into a service agreement with IFE of Norway for irradiation testing of Lightbridge advanced metallic nuclear fuel samples under prototypic commercial reactor operating conditions in IFE’s Halden Research Reactor.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Consulting Business Segment</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Our business model expanded with the establishment of a consulting business segment in 2007, through which we provide consulting and strategic advisory services to companies and governments planning to create or expand electricity generation capabilities using nuclear power plants. On August 1, 2008, we signed separate consulting services agreements with two government entities: Emirates Nuclear Energy Corporation (“ENEC”) formed by Abu Dhabi, one of the member Emirates of the United Arab Emirates (“UAE”), and the Federal Authority for Nuclear Regulation (“FANR”) formed by the government of the UAE. Under these two original agreements, we have provided consulting and strategic advisory services over a contract term of five years starting from June 23, 2008. The ENEC contract had been extended through 2015. The FANR contract has been extended to December 31, 2016. These contracts can each continue to be extended upon agreement by both parties.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">On August 11, 2014, we were selected to provide quality assurance, safety and construction inspection services in support of the in-house inspection team of FANR. As a team with Lloyd’s Register, this work is in addition to our ongoing support of FANR’s activities.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">During the fourth quarter of 2014, we signed a contract with ENEC to provide management consulting services to their Seoul Korea office, on a time and material basis.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Accounting Policies and Pronouncements</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Basis of Consolidation</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">These consolidated financial statements include the accounts of Lightbridge, a Nevada corporation, and our wholly-owned subsidiaries, TPI, a Delaware corporation, Lightbridge International Holding LLC, a Delaware limited liability company, and our foreign branch offices.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">All significant intercompany transactions and balances have been eliminated in consolidation. We registered a branch office in the United Kingdom in 2008 called Lightbridge Advisors Limited (inactive) and we also established a branch office in Moscow, Russia, in July 2009, both of which are wholly owned by Lightbridge International Holding LLC at December 31, 2015. These branch offices will be closed in 2016. Translation gains and losses for the years ended December 31, 2015 and 2014 were not significant. Foreign branches are winding down as of December 31, 2015.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Use of Estimates and Assumptions</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Significant Estimates</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">These accompanying consolidated financial statements include some amounts that are based on management’s best estimates and judgments. The most significant estimates relate to valuation of stock grants and stock options, derivative liability for the stock purchase warrants, the valuation allowance on deferred tax assets, and various contingent liabilities. It is reasonably possible that these above-mentioned estimates and others may be adjusted as more current information becomes available, and any adjustment could be significant in future reporting periods. It is also reasonably possible that the actual grant date value of the stock options vested might have been materially different than the estimated value.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Fair Value of Financial Instruments</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable, and derivative warrant liabilities. The fair value of a financial instrument is the amount that would be received in an asset sale or paid to transfer a liability in an orderly transaction between unaffiliated market participants. Assets and liabilities measured at fair value are categorized based on whether the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value of the derivative warrant liabilities were determined based on “Level 3” inputs. See note 10 for more information on the Level 3 inputs and valuation of the derivative warrant liability and note 13 for more information on fair value measurements.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Certain Risks, Uncertainties and Concentrations</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">We are an early stage company and will likely need additional funding by way of strategic alliances, further offerings of equity securities, an offering of debt securities, or a financing through a bank in order to support the remaining research and development activities required to further enhance and complete the development of our fuel products to a commercial stage. Currently, we are working on consulting revenue opportunities with the overall goal of increasing our profitability and cash flow.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">We participate in a government-regulated industry. Our operating results are affected by a wide variety of factors including decreases in the use or public favor of nuclear power, the ability of our technology to safeguard the production of nuclear power and our ability to safeguard our patents and intellectual property from competitors. Due to these factors, we may experience substantial period-to-period fluctuations in our future operating results. Potentially, a loss of a key officer, key management, and other personnel could impair our ability to successfully execute our business strategy, particularly when these individuals have acquired specialized knowledge and skills with respect to nuclear power and our operations.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Our future operations and earnings currently depend on the results of the Company’s operations outside the United States. There can be no assurance that the Company will be able to successfully continue to conduct such operations, and a failure to do so would have a material adverse effect on the Company’s research and development activities, financial position, results of operations, and cash flows. Also, the success of the Company’s operations will be subject to other numerous contingencies, some of which are beyond management’s control. These contingencies include general and regional economic conditions, competition, changes in regulations, changes in accounting and taxation standards, inability to achieve overall long-term goals, future impairment charges and global or regional catastrophic events. Because the Company is dependent on its international operations for almost all its revenue, the Company may be subject to various additional political, economic, and other uncertainties.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Accounts receivable are typically unsecured and are primarily derived from revenues earned from customers located in the Middle East. We perform ongoing evaluations to determine customer credit and we limit the amount of credit we extend, but generally we do not require collateral from our customers. We maintain reserves for estimated credit losses if necessary, however, no reserve has been set up at December 31, 2015 and 2014, as we have not incurred any credit losses from our customers to date.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Approximately
56% and
81% of the total revenues reported for the years ended December 31, 2015 and 2014, respectively, were from the ENEC and FANR contracts. Contracts with one other customer constituted approximately
34% and
15% of the total revenues reported for the years ended December 31, 2015 and 2014, respectively.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Revenue Recognition</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Consulting Business Segment</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">At the present time, we derive all of our revenue from our consulting business segment on a time and expense basis as provided, by offering consulting services to governments outside the United States planning to create or expand electricity generation capabilities using nuclear power plants. Our fee structure for each client engagement is dependent on a number of variables, including the size of the client, the complexity, the level of the opportunity for us to improve the client’s electrical generation capabilities using nuclear power plants, and other factors. The accounting policy we use to recognize revenue depends on the terms and conditions of the specific contract.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Revenues from the Executive Affairs Authority (“EAA”) of Abu Dhabi, one of the member Emirates of the UAE, and the related entities, ENEC and FANR, are billed on both a time and expense basis.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">We recognize revenue in accordance with SEC Staff Accounting Bulletin or SAB, No. 104, “Revenue Recognition.” We recognize revenue when all of the following conditions are met:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td valign="top">(1)</td>
<td valign="top">There is persuasive evidence of an arrangement;</td>
</tr>
<tr>
<td valign="top">(2)</td>
<td valign="top">The service has been provided to the customer;</td>
</tr>
<tr>
<td valign="top">(3)</td>
<td valign="top">The collection of the fees is reasonably assured; and</td>
</tr>
<tr>
<td valign="top" width="5%">(4)</td>
<td valign="top">The amount of fees to be paid by the customer is fixed or determinable.</td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Certain customer arrangements require evaluation of the criteria outlined in the accounting standards for reporting revenue “Gross as a Principal Versus Net as an Agent” in determining whether it is appropriate to record the gross amount of revenue and related costs, or the net amount earned as agent fees. Generally, when we are primarily obligated in a transaction, revenue is recorded on a gross basis.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Other factors that we consider in determining whether to recognize revenue on a gross versus net basis include our assumption of credit risk, latitude in establishing prices, our determination of service specifications, and our involvement in the provision of services. We have determined, based on the credit risk that we bear for collecting consulting fees, travel costs, and other reimbursable costs from our customers, that in 2015 and 2014 we acted as a principal, and therefore we are recognizing as revenue all travel costs and other reimbursable costs billed to our customers.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Cost of consulting services includes labor, travel expenses, stock-based compensation and other related consulting costs.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Technology Business Segment</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Once our nuclear fuel designs have advanced to a commercially usable stage by a fuel fabricator and/or nuclear plant owner/operator, we will seek to license our technology to them or to major government contractors working for the applicable government. We expect that our revenue from these license fees will be recognized on a straight-line basis over the expected period of the related license term.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Cash and Cash Equivalents and Restricted Cash</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
We may at times invest our excess cash in money market mutual funds. We classify all highly liquid investments with stated maturities of three months or less from date of purchase as cash equivalents and all highly liquid investments with stated maturities of greater than three months as marketable securities. We hold cash balances in excess of the federally insured limits of $250,000
with one prominent financial institution. We deem this credit risk not to be significant as our cash is held by a major prominent financial institution. Total cash and cash equivalents held in checking accounts, as reported on the accompanying consolidated balance sheets, totaled approximately $0.6
million and $4.2
million at December 31, 2015 and 2014, respectively.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Restricted cash represents cash being held by the same prominent financial institution that is being used as collateral for our corporate credit cards and future letters of credit that we may issue to some of our foreign customers. The total balance of our restricted cash at December 31, 2015 and 2014 was approximately $0.3
million.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Trade Accounts Receivable</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">We record accounts receivable at the invoiced amount and we do not charge interest. We review the accounts receivable by amounts due from customers which are past due, to identify specific customers with known disputes or collectability issues. In determining the amount of the reserve, we make judgments about the creditworthiness of significant customers based on ongoing credit evaluations. We will also maintain a sales allowance to reserve for potential credits issued to customers. We will determine the amount of the reserve based on historical credits issued.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">There was no provision for doubtful accounts recorded at December 31, 2015 and 2014, as we have not experienced any bad debts from any of our customers.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>
Foreign Currency
<br/>
</i>
</b>
<br/>
The functional currency of our international branches is the local currency. We translate the financial statements of these branches to U.S. dollars using period-end rates of exchange for assets and liabilities, and average rates of exchange for revenues, costs, and expenses. The translation gains/losses for our branch office in Russia were not significant for the years ended December 31, 2015 and 2014.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Patents and Legal Costs</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Patents are stated on the accompanying consolidated balance sheets at cost. Patent costs consist primarily of legal fees and application costs for filing and pursuing patent applications. The costs of the patents, once placed in service, will be amortized on a straight-line basis over their estimated useful lives or the remaining legal lives of the patents, whichever is shorter. The amortization periods for our patents can range between
17
and
20
years if placed into service at the beginning of their legal lives. Our patents have not been placed in service for the years ended December 31, 2015 and 2014.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Legal costs are expensed as incurred except for legal costs to file for patent protection, which are capitalized and reported as patents on the accompanying consolidated balance sheets.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Impairment of long-lived assets</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Long-lived assets of the Company are reviewed for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not consider it necessary to record any impairment charges for the years ended December 31, 2015 and 2014.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Research, Development and Related Expenses</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">These costs from our technology business segment are charged to operations in the period incurred and are shown on a separate line on the accompanying consolidated statements of operations.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Warrant Liability</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company accounts for stock warrants as either equity instruments or derivative liabilities depending on the specific terms of the warrant agreement. Stock warrants are accounted for as a derivative in accordance with Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”) if the stock warrants contain terms that could potentially require “net cash settlement” and therefore, do not meet the scope exception for treatment as a derivative. Warrant instruments that could potentially require “net cash settlement” in the absence of express language precluding such settlement are initially classified as derivative liabilities at their estimated fair values, regardless of the likelihood that such instruments will ever be settled in cash. The Company will continue to classify the fair value of the warrants that contain “net cash settlement” as a liability until the warrants are exercised, expire or are amended in a way that would no longer require these warrants to be classified as a liability. For additional discussion of our warrants, see Note 10 - Warrant Liability.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Commitments and Contingencies</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. The Company’s legal costs associated with contingent liabilities are recorded to expense as incurred.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Stock-Based Compensation</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The stock-based compensation expense incurred by Lightbridge for employees and directors in connection with its equity incentive plan is based on the employee model of ASC 718, and the fair value of the options is measured at the grant date. Under ASC 718 employee is defined as, “An individual over whom the grantor of a share-based compensation award exercises or has the right to exercise sufficient control to establish an employer-employee relationship based on common law as illustrated in case law and currently under U.S. Tax Regulations.” Our advisory board members and consultants do not meet the employer-employee relationship as defined by the IRS and therefore are accounted for under ASC 505-50.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">ASC 505-50-30-11 (previously EITF 96-18) further provides that an issuer shall measure the fair value of the equity instruments in these transactions using the stock price and other measurement assumptions as of the earlier of the following dates, referred to as the measurement date:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td width="5%"> </td>
<td valign="top" width="5%">i.</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt; margin: inherit;">The date at which a commitment for performance by the counterparty to earn the equity instruments is reached (a performance commitment); and</p>
</td>
</tr>
<tr>
<td width="5%"> </td>
<td width="5%"> </td>
<td> </td>
</tr>
<tr>
<td width="5%"> </td>
<td valign="top" width="5%">ii.</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt; margin: inherit;">The date at which the counterparty’s performance is complete.</p>
</td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">We have elected to use the Black-Scholes pricing model to determine the fair value of stock options on the measurement date of the grant. Restricted stock units are measured based on the fair values of the underlying stock on the measurement date of the grant. Shares that are issued to officers on the exercise dates of their stock options may be issued net of the minimum statutory withholding requirements to be paid by us on behalf of our employees. As a result, the actual number of shares issued will be fewer than the actual number of shares exercised under the stock option. We recognize stock-based compensation using the straight-line method over the requisite service period.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Segment Reporting</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
We use the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by our chief decision makers for making operating decisions and assessing performance, as the source for determining our reportable segments. We have determined that we have two operating segments as defined by the FASB accounting pronouncement, “
<i>Disclosures about Segments of an Enterprise and Related Information</i>
.” As discussed above, our two reporting business segments are our technology business and our consulting services business (see Note 12 - Business Segment Results).
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Recent Accounting Pronouncements</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Leases – In February 2016, the FASB issued ASU 2016-02 which amends existing lease accounting guidance, including the requirement to recognize most lease arrangements on the balance sheet. The adoption of this standard will result in the Company recognizing a right-of-use asset representing its rights to use the underlying asset for the lease term with an offsetting lease liability. ASU 2016-02 will be effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the potential impact of the adoption of this accounting pronouncement to its consolidated financial statements.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">During November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes”, which simplifies the presentation of deferred income taxes. This ASU requires that deferred tax assets and liabilities be classified on a net basis as non-current in a statement of financial position. Adoption of this ASU did not have an effect on our deferred tax assets and deferred tax liabilities in our consolidated balance sheet as of December 31, 2015.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<i>Consolidation</i>
— In February, 2015, the FASB issued ASU No. 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis”. This will improve certain areas of consolidation guidance for reporting organizations that are required to evaluate whether to consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures. ASU 2015-02 simplified and improves GAAP by: eliminating the presumption that a general partner should consolidate a limited partnership, eliminating the indefinite deferral of FASB Statement No. 167, thereby reducing the number of Variable Interest Entity (VIE) consolidation models from four to two (including the limited partnership consolidation model), and clarifying when fees paid to a decision maker should be a factor to include in the consolidation of VIEs. ASU 2015-02 will be effective for periods beginning after December 15, 2015. The Company is currently evaluating the potential impact of the adoption of this guidance on its financial statements.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<i>Going Concern</i>
— In August 2014, FASB issued guidance that requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The updated accounting guidance will be effective for the Company on December 31, 2016, and early adoption is permitted. The Company will evaluate the going concern considerations in this guidance upon adoption.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<i>Revenue Recognition</i>
— In May 2014, the FASB issued guidance on revenue from contracts with customers that will supersede most current revenue recognition guidance, including industry-specific guidance. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration of time value of money in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The guidance is effective for the interim and annual periods beginning on or after December 15, 2017, (early adoption is permitted but not sooner than the annual reporting periods beginning after December 15, 2016). The guidance permits the use of either a retrospective or cumulative effect transition method. The Company is currently evaluating the revenue recognition provisions in this guidance upon adoption.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company does not expect the adoption of any recent accounting pronouncements to have a material impact on its financial statements.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Basis of Consolidation</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">These consolidated financial statements include the accounts of Lightbridge, a Nevada corporation, and our wholly-owned subsidiaries, TPI, a Delaware corporation, Lightbridge International Holding LLC, a Delaware limited liability company, and our foreign branch offices.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">All significant intercompany transactions and balances have been eliminated in consolidation. We registered a branch office in the United Kingdom in 2008 called Lightbridge Advisors Limited (inactive) and we also established a branch office in Moscow, Russia, in July 2009, both of which are wholly owned by Lightbridge International Holding LLC at December 31, 2015. These branch offices will be closed in 2016. Translation gains and losses for the years ended December 31, 2015 and 2014 were not significant. Foreign branches are winding down as of December 31, 2015.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Use of Estimates and Assumptions</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Significant Estimates</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">These accompanying consolidated financial statements include some amounts that are based on management’s best estimates and judgments. The most significant estimates relate to valuation of stock grants and stock options, derivative liability for the stock purchase warrants, the valuation allowance on deferred tax assets, and various contingent liabilities. It is reasonably possible that these above-mentioned estimates and others may be adjusted as more current information becomes available, and any adjustment could be significant in future reporting periods. It is also reasonably possible that the actual grant date value of the stock options vested might have been materially different than the estimated value.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Fair Value of Financial Instruments</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable, and derivative warrant liabilities. The fair value of a financial instrument is the amount that would be received in an asset sale or paid to transfer a liability in an orderly transaction between unaffiliated market participants. Assets and liabilities measured at fair value are categorized based on whether the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value of the derivative warrant liabilities were determined based on “Level 3” inputs. See note 10 for more information on the Level 3 inputs and valuation of the derivative warrant liability and note 13 for more information on fair value measurements.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Certain Risks, Uncertainties and Concentrations</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">We are an early stage company and will likely need additional funding by way of strategic alliances, further offerings of equity securities, an offering of debt securities, or a financing through a bank in order to support the remaining research and development activities required to further enhance and complete the development of our fuel products to a commercial stage. Currently, we are working on consulting revenue opportunities with the overall goal of increasing our profitability and cash flow.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">We participate in a government-regulated industry. Our operating results are affected by a wide variety of factors including decreases in the use or public favor of nuclear power, the ability of our technology to safeguard the production of nuclear power and our ability to safeguard our patents and intellectual property from competitors. Due to these factors, we may experience substantial period-to-period fluctuations in our future operating results. Potentially, a loss of a key officer, key management, and other personnel could impair our ability to successfully execute our business strategy, particularly when these individuals have acquired specialized knowledge and skills with respect to nuclear power and our operations.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Our future operations and earnings currently depend on the results of the Company’s operations outside the United States. There can be no assurance that the Company will be able to successfully continue to conduct such operations, and a failure to do so would have a material adverse effect on the Company’s research and development activities, financial position, results of operations, and cash flows. Also, the success of the Company’s operations will be subject to other numerous contingencies, some of which are beyond management’s control. These contingencies include general and regional economic conditions, competition, changes in regulations, changes in accounting and taxation standards, inability to achieve overall long-term goals, future impairment charges and global or regional catastrophic events. Because the Company is dependent on its international operations for almost all its revenue, the Company may be subject to various additional political, economic, and other uncertainties.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Accounts receivable are typically unsecured and are primarily derived from revenues earned from customers located in the Middle East. We perform ongoing evaluations to determine customer credit and we limit the amount of credit we extend, but generally we do not require collateral from our customers. We maintain reserves for estimated credit losses if necessary, however, no reserve has been set up at December 31, 2015 and 2014, as we have not incurred any credit losses from our customers to date.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Approximately
56% and
81% of the total revenues reported for the years ended December 31, 2015 and 2014, respectively, were from the ENEC and FANR contracts. Contracts with one other customer constituted approximately
34% and
15% of the total revenues reported for the years ended December 31, 2015 and 2014, respectively.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Revenue Recognition</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Consulting Business Segment</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">At the present time, we derive all of our revenue from our consulting business segment on a time and expense basis as provided, by offering consulting services to governments outside the United States planning to create or expand electricity generation capabilities using nuclear power plants. Our fee structure for each client engagement is dependent on a number of variables, including the size of the client, the complexity, the level of the opportunity for us to improve the client’s electrical generation capabilities using nuclear power plants, and other factors. The accounting policy we use to recognize revenue depends on the terms and conditions of the specific contract.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Revenues from the Executive Affairs Authority (“EAA”) of Abu Dhabi, one of the member Emirates of the UAE, and the related entities, ENEC and FANR, are billed on both a time and expense basis.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">We recognize revenue in accordance with SEC Staff Accounting Bulletin or SAB, No. 104, “Revenue Recognition.” We recognize revenue when all of the following conditions are met:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td valign="top">(1)</td>
<td valign="top">There is persuasive evidence of an arrangement;</td>
</tr>
<tr>
<td valign="top">(2)</td>
<td valign="top">The service has been provided to the customer;</td>
</tr>
<tr>
<td valign="top">(3)</td>
<td valign="top">The collection of the fees is reasonably assured; and</td>
</tr>
<tr>
<td valign="top" width="5%">(4)</td>
<td valign="top">The amount of fees to be paid by the customer is fixed or determinable.</td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Certain customer arrangements require evaluation of the criteria outlined in the accounting standards for reporting revenue “Gross as a Principal Versus Net as an Agent” in determining whether it is appropriate to record the gross amount of revenue and related costs, or the net amount earned as agent fees. Generally, when we are primarily obligated in a transaction, revenue is recorded on a gross basis.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Other factors that we consider in determining whether to recognize revenue on a gross versus net basis include our assumption of credit risk, latitude in establishing prices, our determination of service specifications, and our involvement in the provision of services. We have determined, based on the credit risk that we bear for collecting consulting fees, travel costs, and other reimbursable costs from our customers, that in 2015 and 2014 we acted as a principal, and therefore we are recognizing as revenue all travel costs and other reimbursable costs billed to our customers.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Cost of consulting services includes labor, travel expenses, stock-based compensation and other related consulting costs.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Technology Business Segment</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Once our nuclear fuel designs have advanced to a commercially usable stage by a fuel fabricator and/or nuclear plant owner/operator, we will seek to license our technology to them or to major government contractors working for the applicable government. We expect that our revenue from these license fees will be recognized on a straight-line basis over the expected period of the related license term.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Cash and Cash Equivalents and Restricted Cash</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
We may at times invest our excess cash in money market mutual funds. We classify all highly liquid investments with stated maturities of three months or less from date of purchase as cash equivalents and all highly liquid investments with stated maturities of greater than three months as marketable securities. We hold cash balances in excess of the federally insured limits of $250,000
with one prominent financial institution. We deem this credit risk not to be significant as our cash is held by a major prominent financial institution. Total cash and cash equivalents held in checking accounts, as reported on the accompanying consolidated balance sheets, totaled approximately $0.6
million and $4.2
million at December 31, 2015 and 2014, respectively.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Restricted cash represents cash being held by the same prominent financial institution that is being used as collateral for our corporate credit cards and future letters of credit that we may issue to some of our foreign customers. The total balance of our restricted cash at December 31, 2015 and 2014 was approximately $0.3
million.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Trade Accounts Receivable</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">We record accounts receivable at the invoiced amount and we do not charge interest. We review the accounts receivable by amounts due from customers which are past due, to identify specific customers with known disputes or collectability issues. In determining the amount of the reserve, we make judgments about the creditworthiness of significant customers based on ongoing credit evaluations. We will also maintain a sales allowance to reserve for potential credits issued to customers. We will determine the amount of the reserve based on historical credits issued.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">There was no provision for doubtful accounts recorded at December 31, 2015 and 2014, as we have not experienced any bad debts from any of our customers.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>
Foreign Currency
<br/>
</i>
</b>
<br/>
The functional currency of our international branches is the local currency. We translate the financial statements of these branches to U.S. dollars using period-end rates of exchange for assets and liabilities, and average rates of exchange for revenues, costs, and expenses. The translation gains/losses for our branch office in Russia were not significant for the years ended December 31, 2015 and 2014.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Patents and Legal Costs</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Patents are stated on the accompanying consolidated balance sheets at cost. Patent costs consist primarily of legal fees and application costs for filing and pursuing patent applications. The costs of the patents, once placed in service, will be amortized on a straight-line basis over their estimated useful lives or the remaining legal lives of the patents, whichever is shorter. The amortization periods for our patents can range between
17
and
20
years if placed into service at the beginning of their legal lives. Our patents have not been placed in service for the years ended December 31, 2015 and 2014.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Legal costs are expensed as incurred except for legal costs to file for patent protection, which are capitalized and reported as patents on the accompanying consolidated balance sheets.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Impairment of long-lived assets</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Long-lived assets of the Company are reviewed for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not consider it necessary to record any impairment charges for the years ended December 31, 2015 and 2014.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Research, Development and Related Expenses</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">These costs from our technology business segment are charged to operations in the period incurred and are shown on a separate line on the accompanying consolidated statements of operations.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Warrant Liability</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company accounts for stock warrants as either equity instruments or derivative liabilities depending on the specific terms of the warrant agreement. Stock warrants are accounted for as a derivative in accordance with Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”) if the stock warrants contain terms that could potentially require “net cash settlement” and therefore, do not meet the scope exception for treatment as a derivative. Warrant instruments that could potentially require “net cash settlement” in the absence of express language precluding such settlement are initially classified as derivative liabilities at their estimated fair values, regardless of the likelihood that such instruments will ever be settled in cash. The Company will continue to classify the fair value of the warrants that contain “net cash settlement” as a liability until the warrants are exercised, expire or are amended in a way that would no longer require these warrants to be classified as a liability. For additional discussion of our warrants, see Note 10 - Warrant Liability.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Commitments and Contingencies</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. The Company’s legal costs associated with contingent liabilities are recorded to expense as incurred.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Stock-Based Compensation</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The stock-based compensation expense incurred by Lightbridge for employees and directors in connection with its equity incentive plan is based on the employee model of ASC 718, and the fair value of the options is measured at the grant date. Under ASC 718 employee is defined as, “An individual over whom the grantor of a share-based compensation award exercises or has the right to exercise sufficient control to establish an employer-employee relationship based on common law as illustrated in case law and currently under U.S. Tax Regulations.” Our advisory board members and consultants do not meet the employer-employee relationship as defined by the IRS and therefore are accounted for under ASC 505-50.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">ASC 505-50-30-11 (previously EITF 96-18) further provides that an issuer shall measure the fair value of the equity instruments in these transactions using the stock price and other measurement assumptions as of the earlier of the following dates, referred to as the measurement date:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td width="5%"> </td>
<td valign="top" width="5%">i.</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt; margin: inherit;">The date at which a commitment for performance by the counterparty to earn the equity instruments is reached (a performance commitment); and</p>
</td>
</tr>
<tr>
<td width="5%"> </td>
<td width="5%"> </td>
<td> </td>
</tr>
<tr>
<td width="5%"> </td>
<td valign="top" width="5%">ii.</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt; margin: inherit;">The date at which the counterparty’s performance is complete.</p>
</td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">We have elected to use the Black-Scholes pricing model to determine the fair value of stock options on the measurement date of the grant. Restricted stock units are measured based on the fair values of the underlying stock on the measurement date of the grant. Shares that are issued to officers on the exercise dates of their stock options may be issued net of the minimum statutory withholding requirements to be paid by us on behalf of our employees. As a result, the actual number of shares issued will be fewer than the actual number of shares exercised under the stock option. We recognize stock-based compensation using the straight-line method over the requisite service period.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Segment Reporting</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
We use the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by our chief decision makers for making operating decisions and assessing performance, as the source for determining our reportable segments. We have determined that we have two operating segments as defined by the FASB accounting pronouncement, “
<i>Disclosures about Segments of an Enterprise and Related Information</i>
.” As discussed above, our two reporting business segments are our technology business and our consulting services business (see Note 12 - Business Segment Results).
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Recent Accounting Pronouncements</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Leases – In February 2016, the FASB issued ASU 2016-02 which amends existing lease accounting guidance, including the requirement to recognize most lease arrangements on the balance sheet. The adoption of this standard will result in the Company recognizing a right-of-use asset representing its rights to use the underlying asset for the lease term with an offsetting lease liability. ASU 2016-02 will be effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the potential impact of the adoption of this accounting pronouncement to its consolidated financial statements.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">During November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes”, which simplifies the presentation of deferred income taxes. This ASU requires that deferred tax assets and liabilities be classified on a net basis as non-current in a statement of financial position. Adoption of this ASU did not have an effect on our deferred tax assets and deferred tax liabilities in our consolidated balance sheet as of December 31, 2015.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<i>Consolidation</i>
— In February, 2015, the FASB issued ASU No. 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis”. This will improve certain areas of consolidation guidance for reporting organizations that are required to evaluate whether to consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures. ASU 2015-02 simplified and improves GAAP by: eliminating the presumption that a general partner should consolidate a limited partnership, eliminating the indefinite deferral of FASB Statement No. 167, thereby reducing the number of Variable Interest Entity (VIE) consolidation models from four to two (including the limited partnership consolidation model), and clarifying when fees paid to a decision maker should be a factor to include in the consolidation of VIEs. ASU 2015-02 will be effective for periods beginning after December 15, 2015. The Company is currently evaluating the potential impact of the adoption of this guidance on its financial statements.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<i>Going Concern</i>
— In August 2014, FASB issued guidance that requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The updated accounting guidance will be effective for the Company on December 31, 2016, and early adoption is permitted. The Company will evaluate the going concern considerations in this guidance upon adoption.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<i>Revenue Recognition</i>
— In May 2014, the FASB issued guidance on revenue from contracts with customers that will supersede most current revenue recognition guidance, including industry-specific guidance. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration of time value of money in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The guidance is effective for the interim and annual periods beginning on or after December 15, 2017, (early adoption is permitted but not sooner than the annual reporting periods beginning after December 15, 2016). The guidance permits the use of either a retrospective or cumulative effect transition method. The Company is currently evaluating the revenue recognition provisions in this guidance upon adoption.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The Company does not expect the adoption of any recent accounting pronouncements to have a material impact on its financial statements.</p>
100000
600000
1500000
74400000
0.10
P24M
0.56
0.81
0.34
0.15
250000
600000
4200000
300000
P17Y
P20Y
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Note 2. Net Loss Per Share</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Basic net loss per share is computed using the weighted-average number of common shares outstanding during the period except that it does not include unvested common shares subject to repurchase or cancellation. Diluted net income per share is computed using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options, warrants, restricted shares, and unvested common shares subject to repurchase or cancellation. The dilutive effect of outstanding stock options, restricted shares, restricted stock units, and warrants is not reflected in diluted earnings per share because we incurred net losses for the years ended December 31, 2015 and 2014, and the effect of including these potential common shares in the diluted earnings per share calculations would be anti-dilutive and are therefore not included in the calculations.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The following table sets forth the computation of the basic and diluted loss per share (rounded in millions except shares outstanding and per share amounts):</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">2015</td>
<td align="center" width="2%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">2014</td>
<td align="left" width="2%"> </td>
</tr>
<tr>
<td> </td>
<td width="1%"> </td>
<td width="11%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="11%"> </td>
<td width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Numerator:</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">                   Net loss</td>
<td align="left" width="1%">$</td>
<td align="right" width="11%">
(4.3)
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%">$</td>
<td align="right" width="11%">
(3.7)
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Denominator:</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">                   Weighted-average common shares outstanding</td>
<td align="left" width="1%"> </td>
<td align="right" width="11%">
18,239,302
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="11%">
15,463,392
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">                   Basic and diluted net loss per share</td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="11%">
(0.24)
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="11%">
(0.24)
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
</table>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">2015</td>
<td align="center" width="2%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">2014</td>
<td align="left" width="2%"> </td>
</tr>
<tr>
<td> </td>
<td width="1%"> </td>
<td width="11%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="11%"> </td>
<td width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Numerator:</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">                   Net loss</td>
<td align="left" width="1%">$</td>
<td align="right" width="11%">
(4.3)
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%">$</td>
<td align="right" width="11%">
(3.7)
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Denominator:</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">                   Weighted-average common shares outstanding</td>
<td align="left" width="1%"> </td>
<td align="right" width="11%">
18,239,302
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="11%">
15,463,392
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">                   Basic and diluted net loss per share</td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="11%">
(0.24)
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="11%">
(0.24)
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
</table>
-4300000
-3700000
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Note 3. Accounts Receivable – Project Revenue and Reimbursable Project Costs</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>FANR and ENEC Projects</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
The total accounts receivable from the FANR and ENEC contracts was approximately $31,000
and $0.5
million at December 31, 2015 and 2014, respectively. These amounts due from FANR and ENEC represent approximately
23% of the accounts receivable reported at December 31, 2015 and approximately
92% of the accounts receivable at December 31, 2014. There were two other customers that represented approximately
77% of the total accounts receivable at December 31, 2015.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Total unbilled accounts receivable was $0.1
million at December 31, 2015 and not significant at December 31, 2014. Foreign currency transaction exchange losses and translation gains and losses for the year ended December, 2015 and 2014, were not significant.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Travel costs and other reimbursable costs under these contracts are reported in the accompanying statement of operations as both revenue and cost of consulting services provided, and were not significant for the years ended December 31, 2015 and 2014, respectively. The total travel and other reimbursable expenses that have not been reimbursed to us and are included in total accounts receivable reported above from our consulting contracts was not significant at December 31, 2015 and 2014.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Under these agreements with ENEC and FANR, revenue will be recognized on a time and expense basis and fixed contract basis. We periodically discuss our consulting work with ENEC and FANR, who will review the work we perform, and our reimbursable travel expenses, and accept our monthly invoicing for services and reimbursable expenses. We expect the variation of revenue we earn from these contracts to continue.</p>
31000
500000
0.23
0.92
0.77
100000
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Note 4. Prepaid Expenses and Other Current Assets</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Prepaid expenses consist primarily of prepayments made for various insurance policies, travel, rent, and other miscellaneous prepayments. Total prepaid expenses and other current assets reported on the accompanying consolidated balance sheets at December 31, 2015 and 2014, were approximately $0.2
million and $0.2
million, respectively.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
One month of rent or approximately $33,000
represents the one month advance rent placed on the prior McLean, Virginia corporate offices (see note 7). A security deposit of approximately $15,000
was placed for the new corporate offices in Reston Virginia (see note 7). The security deposits at December 31, 2015 and 2014, are reported under the balance sheet caption prepaid expenses and other current assets.
</p>
200000
200000
33000
15000
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Note 5. Patents</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Patents represent legal fees and filing costs that are capitalized and amortized over their estimated useful lives of
17
to
20
years or their remaining legal lives, whichever is shorter, after they are placed in service. In both 2015 and 2014, we capitalized approximately $0.1
million for patent filing costs, for a total investment in patents of approximately $1.0
million and $0.8
million as of December 31, 2015 and 2014, respectively.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">No amortization expense of patents was recorded in either of the years ended December 31, 2015 and 2014. These patents were not placed in service for the years ended December 31, 2015 and 2014, or in prior years.</p>
100000
1000000
800000
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Note 6. Accounts Payable and Accrued Liabilities</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Accounts payable and accrued expenses (rounded in millions) consisted of the following:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%">December 31,</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%">December 31,</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">2015</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">2014</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Trade payables</td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="12%">
0.3
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="12%">
0.3
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Accrued expenses and other</td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
0.4
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
0.4
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Accrued bonuses</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
0.5
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
0.0
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Total</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
1.2
</td>
<td align="left" width="2%"> </td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
0.7
</td>
<td align="left" width="2%"> </td>
</tr>
</table>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%">December 31,</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%">December 31,</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">2015</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">2014</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Trade payables</td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="12%">
0.3
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="12%">
0.3
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Accrued expenses and other</td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
0.4
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
0.4
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Accrued bonuses</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
0.5
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
0.0
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Total</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
1.2
</td>
<td align="left" width="2%"> </td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
0.7
</td>
<td align="left" width="2%"> </td>
</tr>
</table>
300000
300000
400000
400000
500000
0
1200000
700000
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Note 7. Commitments and Contingencies</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Operating Leases</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On January 1, 2015 we entered into a lease for our old office space for a
38
month term, with a monthly rent payment of approximately $32,000
per month plus additional charges with no rent charged for the initial
2
months of the lease term. Total rent expense was approximately $0.4
million and $0.5
million for the years ended December 31, 2015 and 2014, respectively. On December 17, 2015 we entered into a sublease agreement for this prior office space with a third party with a lease term starting January 1, 2016 to February 28, 2018. The average monthly rent to be received under this sub-lease is approximately $15,000
per month, over the sub-lease term. The present value of the negative cash flows over this sub-lease term is approximately $433,000
and this amount plus a real estate commission paid to find the sub-lease tenant of approximately $20,000, resulted in a total $453,000
that was recognized as an abandonment loss. This total was recorded under general and administrative expenses for the year ended December 31, 2015. The long-term portion of deferred lease abandonment liability was $196,938
and the short-term portion of deferred lease abandonment liability of $236,529
was included in accounts payable and accrued liabilities at December 31, 2015.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On December 22, 2015 we entered into a lease for new office space for a
12
month term, with a monthly rent payment of approximately $6,500
per month plus additional charges.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">As of December 31, 2015, future minimum lease payments required under the non-cancelable operating leases are as follows (rounded in millions):</p>
<div align="center">
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="50%">
<tr valign="top">
<td align="left">
<u>Year ending December 31,</u>
</td>
<td align="left" width="1%"> </td>
<td align="center" width="27%">
<u>Amount</u>
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">    2016</td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="27%">
0.5
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">    2017</td>
<td align="left" width="1%"> </td>
<td align="right" width="27%">
0.4
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">    2018</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="27%">
0.1
</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">     Total minimum payments required</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="27%">
1.0
</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="2%"> </td>
</tr>
</table>
</div>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Minimum payments have not been reduced by minimum sublease rentals of $0.4
million due in the future under non-cancelable subleases.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>
<i>Litigation</i>
</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Our former Chief Financial Officer filed a complaint against the Company and Seth Grae, President and Chief Executive Officer, with the Circuit Court of Fairfax County, Virginia (the “Fairfax County Complaint”), and a separate complaint against the Company with the U.S. Occupational Safety and Health Administration (the “OSHA Complaint”) on March 9, 2015.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
The Fairfax County Complaint contained two claims for damages. The first claim alleged that the Company and Mr. Grae made defamatory statements regarding the former Chief Financial Officer. The claim demands at least $1,000,000
in compensatory damages; costs, including reasonable fees for attorneys; and punitive damages of $1,000,000. The second claim alleges that the Company breached the former Chief Financial Officer’s employment contract by not paying the former Chief Financial Officer $15,507
for paid time off, and demands additional compensatory damages of at least $15,507.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
In November 2015, subsequent to the above Fairfax County Complaint being filed, our legal counsel was notified by the attorney representing the former Chief Financial Officer that the former Chief Financial Officer has voluntarily decided to nonsuit the above Fairfax County Complaint on November 30, 2015. A nonsuit is essentially a voluntary dismissal of the case without prejudice, meaning that he is dismissing the case but that he can refile the suit at a later time. The statute for refiling this case is approximately
6
months from the filing date of this nonsuit.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The OSHA Complaint alleges that the Company unlawfully retaliated against the former Chief Financial Officer for challenging allegedly improper actions of the Company by making allegedly defamatory statements and terminating him from his employment with the Company. The former Chief Financial Officer’s demand for damages is for back pay, front pay, and special damages. The complaint did not specify the amount of damages sought.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
The Company believes that all of the above claims by the former Chief Financial Officer are without merit and intends to vigorously defend itself. As of December 31, 2015, legal fees of $105,046
were incurred that are expected to be paid by the Company’s insurance carrier.
</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="50%">
<tr valign="top">
<td align="left">
<u>Year ending December 31,</u>
</td>
<td align="left" width="1%"> </td>
<td align="center" width="27%">
<u>Amount</u>
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">    2016</td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="27%">
0.5
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">    2017</td>
<td align="left" width="1%"> </td>
<td align="right" width="27%">
0.4
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">    2018</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="27%">
0.1
</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">     Total minimum payments required</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="27%">
1.0
</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="2%"> </td>
</tr>
</table>
500000
400000
100000
1000000
P38M
32000
400000
500000
15000
433000
20000
453000
196938
236529
P12M
6500
400000
1000000
15507
105046
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Note 8. Research and Development Costs</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Research and development costs, included in the accompanying consolidated statement of operations amounted to approximately $1.5
million and $1.5
million for each of the years ended December 31, 2015 and 2014, respectively. We shut down our Moscow office operations as of January 1, 2015 and have since shifted our research and development work primarily to the United States, Canada, and Norway. There were no significant accrued liabilities related to the winding down of our Moscow office at December 31, 2015.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">On October 20, 2014, we announced the signing of an initial cooperation agreement with Canadian Nuclear Laboratories (“CNL”), a wholly owned subsidiary of Atomic Energy of Canada Limited, for fabrication and test reactor irradiation of Lightbridge’s patented next generation metallic nuclear fuel samples. Though we had initially planned for all of the work to take place at a single location in Chalk River, Ontario, Canada, subsequent to our announcement the Canadian government made an official decision to extend the operating life of the National Research Universal reactor at Chalk River only until the end of March 2018. This shorter than expected operating life extension would not be able to accommodate all of our entire anticipated schedule for irradiation testing of our metallic fuel samples. Consequently, our plan is to work with CNL on fabrication of our fuel samples at their Chalk River facilities, with full irradiation of the fabricated fuel samples to be performed separately in a pressurized water loop of the Halden Research Reactor located in Halden, Norway. The operating license of the Halden Research Reactor has recently been renewed through 2020 which fits well with our anticipated irradiation testing schedule. Our current plan is to have post-irradiation examination of the irradiated fuel samples performed on the same site in Norway and nearby hot cell facilities located in Studsvik, Sweden that are operated by the Swedish company Studsvik AB.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On September 9, 2015, we signed a Comprehensive Nuclear Services Agreement with CNL for fabrication of our patented next generation metallic nuclear fuel test samples at CNL facilities at Chalk River, Ontario, Canada. This enabling agreement provides the framework to proceed with Phases
2
and
3
of the test fuel sample fabrication at CNL’s facilities in Chalk River as envisioned in an October 2014 Initial Cooperation Agreement. The initial scope of work under the comprehensive nuclear services agreement involves development of a fabrication plan in the first half of 2016.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">On January 12, 2016, we announced entry into an initial services agreement with BWXT Nuclear Energy, Inc., a wholly owned subsidiary of BWX Technologies, Inc., to evaluate the ability to fabricate and prepare a preliminary plan for fabrication of Lightbridge-designed partial length nuclear fuel samples at BWXT facilities in the United States. This arrangement can provide us with an alternative vendor and site to CNL for fabrication of our patented next generation metallic nuclear fuel test for irradiation testing at the Halden Research Reactor.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On July 8, 2015, we announced the signing of an Umbrella Services Agreement with the Institute for Energy Technology (“IFE”) of Norway for irradiation testing of Lightbridge advanced metallic nuclear fuel samples under prototypic commercial reactor operating conditions in IFE's Halden Research Reactor, southeast of Oslo. The project's pre-irradiation scope includes irradiation-rig mechanical design, detailed neutronic and thermal-hydraulic calculations, and safety analyses with necessary regulatory approvals. The initial phase of irradiation testing is expected to begin in 2017 and continue for about three years to reach the burnup necessary for insertion of lead test assemblies (LTAs) in a commercial power reactor. The final phase of irradiation testing necessary for batch reloads and full cores operating with a
10% power uprate and a
24
-month cycle is expected to take an additional two years and be completed while LTAs have begun operating in the core of a commercial power reactor. The IFE umbrella services agreement is valid for
10
years.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
We have consulting agreements with several consultants working on various projects for us, which total approximately $20,000
per month.
</p>
1500000
1500000
P10Y
20000
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Note 9. Income Taxes</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Our tax provision is determined using an estimate of our annual effective tax rate adjusted for discrete items, if any, that are taken into account in the relevant period. The 2015 and 2014 annual effective tax rate is estimated to be a combined
38% for the U.S. federal and state statutory tax rates. We review tax uncertainties in light of changing facts and circumstances and adjust them accordingly. As of December 31, 2015 and 2014, there were no tax contingencies or unrecognized tax positions recorded.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting, and the amounts recognized for income tax purposes. The significant components of deferred tax assets (at a
38% effective tax rate) as of December 31, 2015 and 2014, respectively, are as follows:
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Deferred Tax Assets</b>
($ in millions)
</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" width="12%">Total</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="12%">Total</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" colspan="4">Deferred Tax Asset</td>
<td align="right" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">2015</td>
<td align="center" width="2%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">2014</td>
<td align="center" width="2%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">2015</td>
<td align="center" width="2%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">2014</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Capitalized start-up costs</td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="12%">
3.6
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="12%">
4.1
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="12%">
1.4
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="12%">
1.5
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Abandonment loss</td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
0.4
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
0.0
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
0.2
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
0.0
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Stock-based compensation - net</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
15.6
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
16.5
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
5.9
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
6.3
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Accruals</td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
0.5
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
0.0
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
0.2
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
0.0
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Net operating loss carry-forward</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
49.4
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
45.2
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
18.8
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
17.2
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Less: valuation allowance</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
(69.5
</td>
<td align="left" width="2%">)</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
(65.8
</td>
<td align="left" width="2%">)</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
(26.5
</td>
<td align="left" width="2%">)</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
(25.0
</td>
<td align="left" width="2%">)</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">                   Total</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
 
-
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
 
-
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
 
-
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
 
-
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
We have a net operating loss carry-forward for federal and state tax purposes of approximately $49.4
million at December 31, 2015, that is potentially available to offset future taxable income, which will begin to expire in the year 2021. For financial reporting purposes, no deferred tax asset was recognized because at December 31, 2015 and 2014, management estimates that it is more likely than not that substantially all of the net operating losses will expire unused.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. The timing and manner in which we can utilize our net operating loss carryforward and future income tax deductions in any year may be limited by provisions of the Internal Revenue Code regarding the change in ownership of corporations. Such limitation may have an impact on the ultimate realization of our carryforwards and future tax deductions. Section 382 of the Internal Revenue Code (“Section 382”) imposes limitations on a corporation’s ability to utilize net operating losses if it experiences an “ownership change.” In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period. Any unused annual limitation may be carried over to later years, and the amount of the limitation may under certain circumstances be increased by the built-in gains in assets held by us at the time of the change that are recognized in the five-year period after the change. Upon review of the ownership shifts, there has not been an ownership change as defined under Section 382.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
As a result, the amount of the deferred tax assets considered realizable was reduced
100% by a valuation allowance. The change in the valuation allowance was approximately $1.4
million and $1.8
million for the years ended December 31, 2015 and 2014, respectively. The excess tax benefits of approximately $0.2
million associated with stock option exercises are recorded directly to stockholders' equity only when realized. Many of the Company’s operating expenses in its 2007 and 2006 tax years were classified under the Internal Revenue Code as capitalized “Startup Costs”, which did not begin to be deductible for tax purposes until 2008. The Company files a consolidated tax return with its subsidiaries. The Company is no longer subject to U.S. federal, state, or non-U.S. income tax examinations by tax authorities for tax years before 2011, except that earlier years can be examined for the sole purpose of challenging the net operating loss carry-forwards arising in those years.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The reconciliation between income taxes (benefit) at the U.S. and State statutory tax rates and the amount recorded in the accompanying consolidated financial statements is as follows:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" width="11%">December 31,</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="11%">December 31,</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">($ in millions)</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">2015</td>
<td align="center" width="2%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">2014</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Tax benefit at U.S. federal statutory rate</td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="center" bgcolor="#e6efff" width="11%">
(1.5)
</td>
<td align="center" bgcolor="#e6efff" width="2%"> </td>
<td align="center" bgcolor="#e6efff" width="1%">$</td>
<td align="center" bgcolor="#e6efff" width="11%">
(1.2)
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">State income taxes/(benefit) before valuation allowance, net of federal benefit</td>
<td align="left" width="1%"> </td>
<td align="center" width="11%">
-
</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="11%">
(0.1)
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Warrant revaluation (income)/expense</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="center" bgcolor="#e6efff" width="11%">
(0.8)
</td>
<td align="center" bgcolor="#e6efff" width="2%"> </td>
<td align="center" bgcolor="#e6efff" width="1%"> </td>
<td align="center" bgcolor="#e6efff" width="11%">
(0.4)
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Capitalized start-up costs</td>
<td align="left" width="1%"> </td>
<td align="center" width="11%">
-
</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="11%">
(0.2)
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Stock-based compensation</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="center" bgcolor="#e6efff" width="11%">
0.9
</td>
<td align="center" bgcolor="#e6efff" width="2%"> </td>
<td align="center" bgcolor="#e6efff" width="1%"> </td>
<td align="center" bgcolor="#e6efff" width="11%">
0.1
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Increase in valuation allowance</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">
1.4
</td>
<td align="center" width="2%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">
1.8
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Total provision for income tax benefit</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="center" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="11%">
0
</td>
<td align="center" bgcolor="#e6efff" width="2%"> </td>
<td align="center" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="center" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="11%">
0
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
</table>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" width="12%">Total</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="12%">Total</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" colspan="4">Deferred Tax Asset</td>
<td align="right" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">2015</td>
<td align="center" width="2%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">2014</td>
<td align="center" width="2%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">2015</td>
<td align="center" width="2%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">2014</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Capitalized start-up costs</td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="12%">
3.6
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="12%">
4.1
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="12%">
1.4
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="12%">
1.5
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Abandonment loss</td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
0.4
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
0.0
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
0.2
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
0.0
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Stock-based compensation - net</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
15.6
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
16.5
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
5.9
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
6.3
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Accruals</td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
0.5
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
0.0
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
0.2
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
0.0
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Net operating loss carry-forward</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
49.4
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
45.2
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
18.8
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
17.2
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Less: valuation allowance</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
(69.5
</td>
<td align="left" width="2%">)</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
(65.8
</td>
<td align="left" width="2%">)</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
(26.5
</td>
<td align="left" width="2%">)</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
(25.0
</td>
<td align="left" width="2%">)</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">                   Total</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
 
-
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
 
-
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
 
-
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
 
-
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
</table>
3600000
4100000
1400000
1500000
400000
0
200000
0
15600000
16500000
5900000
6300000
500000
0
200000
0
49400000
45200000
18800000
17200000
69500000
65800000
26500000
25000000
0
0
0
0
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" width="11%">December 31,</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="11%">December 31,</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">($ in millions)</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">2015</td>
<td align="center" width="2%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">2014</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Tax benefit at U.S. federal statutory rate</td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="center" bgcolor="#e6efff" width="11%">
(1.5)
</td>
<td align="center" bgcolor="#e6efff" width="2%"> </td>
<td align="center" bgcolor="#e6efff" width="1%">$</td>
<td align="center" bgcolor="#e6efff" width="11%">
(1.2)
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">State income taxes/(benefit) before valuation allowance, net of federal benefit</td>
<td align="left" width="1%"> </td>
<td align="center" width="11%">
-
</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="11%">
(0.1)
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Warrant revaluation (income)/expense</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="center" bgcolor="#e6efff" width="11%">
(0.8)
</td>
<td align="center" bgcolor="#e6efff" width="2%"> </td>
<td align="center" bgcolor="#e6efff" width="1%"> </td>
<td align="center" bgcolor="#e6efff" width="11%">
(0.4)
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Capitalized start-up costs</td>
<td align="left" width="1%"> </td>
<td align="center" width="11%">
-
</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="11%">
(0.2)
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Stock-based compensation</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="center" bgcolor="#e6efff" width="11%">
0.9
</td>
<td align="center" bgcolor="#e6efff" width="2%"> </td>
<td align="center" bgcolor="#e6efff" width="1%"> </td>
<td align="center" bgcolor="#e6efff" width="11%">
0.1
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Increase in valuation allowance</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">
1.4
</td>
<td align="center" width="2%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">
1.8
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Total provision for income tax benefit</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="center" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="11%">
0
</td>
<td align="center" bgcolor="#e6efff" width="2%"> </td>
<td align="center" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="center" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="11%">
0
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
</table>
-1500000
-1200000
0
-100000
-800000
-400000
0
200000
900000
100000
1400000
1800000
0.38
0.38
49400000
1.00
1400000
1800000
200000
1.00
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Note 10. Warrant Liability</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Our outstanding warrants are recorded as liabilities at their estimated fair value at the date of issuance, with the subsequent changes in estimated fair value recorded in other income (expense) in the Company’s statement of operations in each subsequent quarterly period. The change in the estimated fair value of our warrant liability for the years ended December 31, 2015 and 2014 resulted in non-cash income of approximately $2.3
million and non-cash income of approximately $1.2
million, respectively. The Company utilizes the Monte Carlo simulation valuation method to value the liability classified warrants.
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The estimated fair value of these warrants is determined using Level 3 inputs. Inherent in the Monte Carlo valuation model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The following table summarizes the calculated aggregate fair values, along with the assumptions utilized in each calculation:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="center"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="11%">December 31,</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="11%">December 31,</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="center"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">2015</td>
<td align="center" width="2%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">2014</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Calculated aggregate value</td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="11%">
2,327,195
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="11%">
4,633,312
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Weighted average exercise price per share of warrant</td>
<td align="left" width="1%">$</td>
<td align="right" width="11%">
3.72
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%">$</td>
<td align="right" width="11%">
3.72
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Closing price per share of common stock</td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="11%">
1.00
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="11%">
1.55
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Weighted average volatility</td>
<td align="left" width="1%"> </td>
<td align="right" width="11%">
83.6%
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="11%">
89.80%
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Weighted average remaining expected life (years)</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="11%">
5.11
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="11%">
6.11
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Weighted average risk-free interest rate</td>
<td align="left" width="1%"> </td>
<td align="right" width="11%">
1.90
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="11%">
1.94
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Dividend yield</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="11%">
0%
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="11%">
0%
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The nature of the warrant liability is such (i.e., the warrant holders receive more value when the Company’s stock price is higher) that increases in the Company’s stock price during the period result in losses on the Company’s income statement while decreases in the Company’s stock price result in the Company recording income.</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="center"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="11%">December 31,</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="11%">December 31,</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="center"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">2015</td>
<td align="center" width="2%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">2014</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Calculated aggregate value</td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="11%">
2,327,195
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="11%">
4,633,312
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Weighted average exercise price per share of warrant</td>
<td align="left" width="1%">$</td>
<td align="right" width="11%">
3.72
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%">$</td>
<td align="right" width="11%">
3.72
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Closing price per share of common stock</td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="11%">
1.00
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="11%">
1.55
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Weighted average volatility</td>
<td align="left" width="1%"> </td>
<td align="right" width="11%">
83.6%
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="11%">
89.80%
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Weighted average remaining expected life (years)</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="11%">
5.11
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="11%">
6.11
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Weighted average risk-free interest rate</td>
<td align="left" width="1%"> </td>
<td align="right" width="11%">
1.90
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="11%">
1.94
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Dividend yield</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="11%">
0%
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="11%">
0%
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
</table>
2327195
4633312
3.72
3.72
1.00
1.55
0.836
0.8980
P5Y1M10D
P6Y1M10D
0.0190
0.0194
0.00
0.00
2300000
1200000
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Note 11. Stockholders’ Equityxxx</b></p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
At December 31, 2015 and December 31, 2014, there are 500,000,000 shares of authorized common stock. Total common stock outstanding at December 31, 2015 and December 31, 2014 was 18,628,957 shares and 18,082,874 shares, respectively. At December 31, 2015, there were 4,886,764 stock warrants and 5,236,909 stock options outstanding, totaling 28,752,630 of total stock and stock equivalents outstanding at December 31, 2015.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
At December 31 2014, there were 4,886,764 stock warrants and 2,026,564 stock options outstanding, totaling 24,996,202 of total stock and stock equivalents outstanding at December 31, 2014.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<u>Equity Purchase Agreement</u></p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On September 4, 2015, we entered into an equity purchase agreement with Aspire Capital Fund, LLC (“Aspire Capital”), which provides that Aspire Capital is committed to purchase up to an aggregate of $10.0 million of shares of our common stock over a two-year term, subject to our election to sell any such shares, and subject to the Nasdaq Listing Rule 5635(d) limitation. Nasdaq Listing Rule 5635(d) (“the Nasdaq 20% Rule”), requires shareholder approval of a transaction other than a public offering involving the sale, issuance, or potential issuance by a company of common stock (or securities convertible into or exercisable for common stock) equal to 20% or more of the common stock, or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the stock. Under this 20% Nasdaq Rule, we had a total of approximately 3.6 million common shares available for sale or transfer to Aspire Capital under this equity purchase agreement at December 31, 2015. See note 14 for subsequent sales of stock to Aspire Capital after December 31, 2015.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Under the agreement, we have the right to sell shares, subject to certain volume limitations and a minimum floor price, to Aspire Capital as of January 8, 2016, the date that the Securities and Exchange Commission (the “SEC”) declared the Form S-1 registration statement registering the resale of the Company’s common stock by Aspire Capital to be effective. On any trading day selected by the Company, the Company will have the right, in its sole discretion, to present Aspire Capital with a purchase notice directing Aspire Capital (as principal) to purchase up to 100,000 shares of the Company’s common stock per business day (in a purchase amount up to $250,000 on each such business day) at a price equal to the lesser of:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td width="5%">
</td>
<td valign="top" width="5%">
1.</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt; margin: inherit;">
The lowest sale price of the Company’s common stock on the purchase date; or</p>
</td>
</tr>
</table>
<br />
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td width="5%">
</td>
<td valign="top" width="5%">
2.</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt; margin: inherit;">
The arithmetic average of the three (3) lowest closing sale prices for the Company’s common stock during the twelve (12) consecutive trading days ending on the trading day immediately preceding the purchase date.</p>
</td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
In addition, on any date on which we submit a purchase notice to Aspire Capital in an amount equal to 100,000 shares, the Company also has the right, in its sole discretion, to present Aspire Capital with a volume-weighted average price purchase notice (each, a “VWAP Purchase Notice”) directing Aspire Capital to purchase an amount of stock equal to up to 30% of the aggregate shares of the Company’s common stock traded on its principal market on the next trading day (the “VWAP Purchase Date”), subject to a maximum number of shares as the Company may determine. The purchase price per share pursuant to such VWAP Purchase Notice is generally 95% of the volume-weighted average price for the Company’s common stock traded on its principal market on the VWAP Purchase Date.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
As part of the agreement, Aspire Capital received 300,000 additional shares as compensation for its commitment, valued at approximately $276,000 or $0.92 per common share.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<u>ATM Offering</u></p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On June 11, 2015, the Company entered into an at-the-market issuance (“ATM”) sales agreement with MLV & Co. LLC ("MLV"), pursuant to which the Company may issue and sell shares of its common stock from time to time through MLV as the Company&apos;s sales agent. On September 1, 2015, MLV was acquired by FBR & Co. The issuance and sale of shares by the Company under the sales agreement are registered shares under the Company&apos;s shelf registration statement on Form S-3, as filed with the Securities and Exchange Commission on June 11, 2015 and declared effective by the Securities and Exchange Commission. The Company has registered the sale of up to $5.8 million of common stock under the ATM sales agreement. There have been 246,083 shares sold for total gross proceeds of approximately $282,000 through the ATM for the twelve month period ended December 31, 2015.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<u>Registered Direct Offering and Outstanding Warrants</u></p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<u>November 12, 2014 Offering</u></p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On November 12, 2014, we completed an offering (the “Offering”) with one existing institutional investor pursuant to which the Company sold an aggregate of 2,878,516 shares of its common stock and warrants to purchase a total of 2,734,590 shares of its common stock for aggregate gross proceeds, before deducting fees to the Placement Agent and other estimated offering expenses payable by the Company, of approximately $5 million. The common stock and warrants were sold in fixed combinations, with each combination consisting of one share of common stock and a warrant to purchase 0.95 shares of common stock. The purchase price was $1.75 per fixed combination. The warrants became exercisable six months and one day following the issuance date of the Offering, on May 18, 2015, and will remain exercisable for seven-and-a-half years from the date of issuance at an exercise price of $2.31 per share. The exercise price of the warrants is subject to adjustment in the case of stock splits, stock dividends, combinations of shares, and similar recapitalization transactions. The exercisability of the warrants may be limited if, upon exercise, the holder or any of its affiliates would beneficially own more than 4.99% of the Company's common stock. This limit may be increased to up to 19.99% upon no fewer than 60 days' notice to the Company.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
We received net proceeds of approximately $4.5 million after payment of certain fees and expenses related to the Offering.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<u>Outstanding Warrants</u></p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left">
</td>
<td align="left" width="1%">
</td>
<td align="center" colspan="4">
December 31,</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
2015</td>
<td align="center" width="2%">
</td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
2014</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
Issued to Investors on July 28, 2010, entitling the holders to purchase 1,034,996 common shares in the Company at an exercise price of $9.00 per common share up to and including July 27, 2017</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">
</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
1,034,996</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">
</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
1,034,996</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">
</td>
</tr>
<tr>
<td>
</td>
<td valign="bottom" width="1%">
</td>
<td valign="bottom" width="12%">
</td>
<td valign="bottom" width="2%">
</td>
<td valign="bottom" width="1%">
</td>
<td valign="bottom" width="12%">
</td>
<td valign="bottom" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
Issued to Investors on October 25, 2013, entitling the holders to purchase 1,250,000 common shares in the Company at an exercise price of $2.30 per common share up to and including April 24, 2021</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">
</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
1,117,178</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">
</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
1,117,178</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">
</td>
</tr>
<tr>
<td>
</td>
<td valign="bottom" width="1%">
</td>
<td valign="bottom" width="12%">
</td>
<td valign="bottom" width="2%">
</td>
<td valign="bottom" width="1%">
</td>
<td valign="bottom" width="12%">
</td>
<td valign="bottom" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
Issued to Investors on November 17, 2014, entitling the holders to purchase 2,734,590 common shares in the Company at an exercise price of $2.31 per common share up to and including May 16, 2022</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">
</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%">
2,734,590</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">
</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%">
</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%">
2,734,590</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">
</td>
</tr>
<tr>
<td>
</td>
<td valign="bottom" width="1%">
</td>
<td valign="bottom" width="12%">
</td>
<td valign="bottom" width="2%">
</td>
<td valign="bottom" width="1%">
</td>
<td valign="bottom" width="12%">
</td>
<td valign="bottom" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
Total</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" valign="bottom" width="1%">
</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" valign="bottom" width="12%">
4,886,764</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">
</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" valign="bottom" width="1%">
</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" valign="bottom" width="12%">
4,886,764</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%">
</td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<u>Exercise of Warrants – Q3-2014</u></p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On September 3, 2014, we issued 132,822 shares of our common stock upon the exercise of warrants issued in conjunction with the October 21, 2013 stock offering. We received $2.30 for each share or approximately $306,000.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<u>Stock-based Compensation – Stock Options and Restricted Stock</u></p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Stock Plan</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On March 25, 2015, the Compensation Committee and Board of Directors approved the 2015 Equity Incentive Plan (the “Plan”) to authorize grants of (a) Incentive Stock Options, (b) Non-qualified Stock Options, (c) Stock Appreciation Rights, (d) Restricted Awards, (e) Performance Share Awards, and (f) Performance Compensation Awards to the employees, consultants, and directors of the Company. The Plan authorizes a total of 3,000,000 shares to be available for grant under the Plan. The Plan became effective upon ratification by the shareholders of the Company at the shareholders’ annual meeting on July 14, 2015. Other provisions are as follows:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td valign="top" width="5%">
(i)</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt; margin: inherit;">
Any shares of common stock granted in connection with Options and Stock Appreciation Rights shall be counted against this limit as one share for every one Stock Option or Stock Appreciation Right awarded. Any shares of common stock granted in connection with Awards other than Options and Stock Appreciation Rights shall be counted against this limit as two shares of common stock for every one share of common stock granted in connection with such Award;</p>
</td>
</tr>
<tr>
<td width="5%">
</td>
<td>
</td>
</tr>
<tr>
<td valign="top" width="5%">
(ii)</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt; margin: inherit;">
Subject to adjustment in accordance with the Plan as amended, no Participant shall be granted, during any one year period, Stock Options to purchase Common Stock and Stock Appreciation Rights with respect to more than one million five hundred thousand (1,500,000) shares of Common Stock in the aggregate. The Plan also separately limits other Equity Awards with respect to more than one million five hundred thousand (1,500,000) shares of Common Stock in the aggregate. If an Award is to be settled in cash, the number of shares of Common Stock on which the Award is based shall count toward the individual share limit; and</p>
</td>
</tr>
<tr>
<td width="5%">
</td>
<td>
</td>
</tr>
<tr>
<td valign="top" width="5%">
(iii)</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt; margin: inherit;">
A ten percent shareholder shall not be granted an Incentive Stock Option unless the Option exercise price is at least 110% of the fair market value of the common stock at the grant date and the option is not exercisable after the expiration of five years from the grant date.</p>
</td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Total stock options outstanding at December 31, 2015 and 2014, were 5,236,909 and 2,026,564, of which 3,442,023 and 1,564,257 of these options were vested at December 31, 2015 and 2014, respectively. Stock option expense was approximately $1,881,000 and $262,000 for the years ended December 31, 2015 and 2014, respectively.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<u>2015 Short-Term Non-Qualified Option Grants</u></p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On April 8, 2015, the Compensation Committee and the Board of Directors granted short term non-qualified stock options totaling 463,192 and 148,845 stock options under the 2006 Stock Plan and the 2015 Equity Incentive Plan, respectively, to employees and consultants of the Company. On April 9, 2015, the Compensation Committee and the Board of Directors granted an additional 47,017 and 3,968 stock options under the 2006 Stock Plan and the 2015 Equity Incentive Plan, respectively, all with a strike price of $1.26. These stock options vested immediately but the grants under the 2015 Equity Incentive Plan were only exercisable upon ratification of the Plan at the annual meeting of shareholders, which took place on July 14, 2015.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On August 12, 2015, the Compensation Committee and the Board of Directors granted short term on-qualified stock options totaling 135,880 stock options under the 2015 Equity Incentive Plan to employees and consultants of the Company, all with a strike price of $1.26. These stock options vested immediately.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On November 20, 2015, the Compensation Committee and the Board of Directors granted short term non-qualified stock options totaling 1,129,135 stock options under the 2015 Equity Incentive Plan to employees and consultants of the Company, all with a strike price of $0.92. These stock options vested immediately.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Also granted under the 2006 Stock Plan were 2,981, 1,775, 1,310, and 8,368 non-qualified stock options on April 30, May 31, June 30, 2015, and December 31, 2015, respectively, as equity compensation in lieu of cash with strike prices ranging from $1.00 to $1.25. Also granted under the 2015 Equity Incentive Plan were 1,812, 1,536, 1,803, 8,255 and 9,752 non-qualified stock options on July 31, August 31, September 30, 2015, October 31, 2015, and November 30, 2015, respectively, as equity compensation in lieu of cash with strike prices ranging from $0.83 to $1.25.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
These stock options have an expected life of 1.5 - 5 years, and a contractual term of 3 - 10 years, a fair value of between $0.25 and $0.91 per stock option, a risk free rate ranging between 0.55% to 1.92%, and volatility ranging between 76% to 88%, as measured on the grant date. The expected option term was calculated using the simplified method as we do not have sufficient historical option data to provide a better estimate of the expected option term. Under this method, the weighted-average expected life is presumed to be the average of the vesting term and the contractual term of the option, which results in a reduction of the estimated option value and consequently the stock option expense. The risk free rate was based on the US Treasury Yield Curve for the expected life of the options on the grant date. Expected dividends are estimated at $0.0, as we have never issued dividends and we have no current plans to issue dividends in the future.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<u>2015 Long-Term Incentive Option Grants</u></p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<u>Employees and Consultants Option Grants</u></p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On April 8, 2015, August 12, 2015, and November 20, 2015, the Compensation Committee and the Board of Directors granted long term incentive stock options totaling 550,972, 79,588, and 661,222 respectively, under the 2015 Equity Incentive Plan, the (“Plan”) to employees and consultants of the Company. These stock options vest 1/3 on each annual anniversary date over three years. These stock options have a strike price ranging from $0.92 to $1.26, and the stock options have a fair value ranging from $0.67 to $0.91, based on a risk free rate of between 1.55% and 1.87%, volatility between 86% and 87%, and an expected life of six years, as measured on the grant date. The expected life is calculated using the simplified method as we do not have sufficient historical option data to provide a better estimate of the expected option term. These options have a 10 year contractual term. The risk free rate was based on the US Treasury Yield Curve for the expected life of the options on the grant date. Expected dividends are estimated at $0.0, as we have never issued dividends and we have no current plans to issue dividends in the future. Grants to our consultants were remeasured as of December 31, 2015, and the fair value of each option was between $0.69 and $0.72 on the measurement date. This re-measured stock option expense for options issued to consultants was not significant. We estimated future pre-vest forfeitures to be 1.5%, based on historical information.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<u>Director Option Grants</u></p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On April 8, 2015, August 12, 2015, and November 20, 2015, the Compensation Committee and the Board of Directors granted 112,996, 23,024, and 97,988 respectively, of long term non-qualified stock options under the 2015 Equity Incentive Plan to the Board of Directors of the Company. These stock options fully vest on the first annual anniversary date of the grant. These stock options have a strike price between $0.92 and $1.26, and the stock options have a fair value of between $0.65 to $0.88, based on a risk free rate between 1.46% and 1.79%, volatility between 86% and 87%, and an expected life of 5.5 years. The expected life is calculated using the simplified method as we do not have any history to provide a better estimate of the expected option term. These options have a 10 year contractual term. The risk free rate was based on the US Treasury Yield Curve for the expected life of the options on the grant date. Expected dividends are estimated at $0.0, as we have never issued dividends and we have no current plans to issue dividends in the future.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<u>2014 Stock Option Grants</u></p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On May 5, 2014, we granted 579,429 stock options to our employees, directors, and consultants. These stock options vest over three years for employees and consultants, and over one year for our directors. The fair value of each option was $1.79 on the grant date, based on (1) The strike price of $2.55, the price of our stock at the close of the market on the grant date; (2) The expected life of the grant of 5 years which is equal to the term of the grant, as historically grants have only been exercised just before the term expires; (3) The risk free rate of 1.68% which is based on the treasury yield curve for a 5 year term as published by the U.S. Treasury for the grant date; (4) Volatility of 90.44%, as measured based on the expected life of the options, and (5) Expected dividends of $0.0, as we have never issued dividends and we have no current plans to issue dividends in the future. Grants to our consultants were re-measured as of December 31, 2015, and the fair value of each option was $0.52 on the measurement date. The re-measured stock option expense for options issued to consultants was not significant. We estimated future pre-vest forfeitures to be 1.5%, based on historical information.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Stock option transactions to the employees, directors and consultants are summarized as follows for the years ended December 31, 2015:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left">
</td>
<td align="left" width="1%">
</td>
<td align="center" nowrap="nowrap" width="12%">
</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="12%">
Weighted</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="12%">
Weighted</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left" width="1%">
</td>
<td align="center" nowrap="nowrap" width="12%">
</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="12%">
Average</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="12%">
Average</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left" width="1%">
</td>
<td align="center" nowrap="nowrap" width="12%">
Options</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="12%">
Exercise</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="12%">
Grant Date Fair</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
Outstanding</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
Price</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
Value</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
Beginning of the period</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="12%">
2,026,564</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" width="12%">
9.19</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" width="12%">
10.61</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
Granted</td>
<td align="left" width="1%">
</td>
<td align="right" width="12%">
3,491,419</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
$</td>
<td align="right" width="12%">
1.08</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
$</td>
<td align="right" width="12%">
0.74</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
Exercised</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="12%">
-</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" width="12%">
-</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" width="12%">
-</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
Forfeited</td>
<td align="left" width="1%">
</td>
<td align="right" width="12%">
(114,407</td>
<td align="left" width="2%">
)</td>
<td align="left" width="1%">
$</td>
<td align="right" width="12%">
6.63</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
$</td>
<td align="right" width="12%">
6.06</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
Expired</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
(166,667</td>
<td align="left" bgcolor="#e6efff" width="2%">
)</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
13.50</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
12.84</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
End of the period</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">
</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
5,236,909</td>
<td align="left" width="2%">
</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">
$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
3.70</td>
<td align="left" width="2%">
</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">
$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
4.06</td>
<td align="left" width="2%">
</td>
</tr>
<tr>
<td bgcolor="#e6efff">
</td>
<td bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">
</td>
<td bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
</td>
<td bgcolor="#e6efff" width="2%">
</td>
<td bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">
</td>
<td bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
</td>
<td bgcolor="#e6efff" width="2%">
</td>
<td bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">
</td>
<td bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
</td>
<td bgcolor="#e6efff" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
Options exercisable</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">
</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
3,442,023</td>
<td align="left" width="2%">
</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">
$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
4.95</td>
<td align="left" width="2%">
</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">
$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
1.68</td>
<td align="left" width="2%">
</td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Stock option transactions to the employees, directors and consultants are summarized as follows for the year ended December 31, 2014:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left">
</td>
<td align="left" width="1%">
</td>
<td align="center" nowrap="nowrap" width="12%">
</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="12%">
Weighted</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="12%">
Weighted</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left" width="1%">
</td>
<td align="center" nowrap="nowrap" width="12%">
</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="12%">
Average</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="12%">
Average</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left" width="1%">
</td>
<td align="center" nowrap="nowrap" width="12%">
Options</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="12%">
Exercise</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="12%">
Grant Date Fair</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
Outstanding</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
Price</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
Value</td>
<td align="left" width="2%">
</td>
</tr>
<tr>
<td>
</td>
<td width="1%">
</td>
<td width="12%">
</td>
<td width="2%">
</td>
<td width="1%">
</td>
<td width="12%">
</td>
<td width="2%">
</td>
<td width="1%">
</td>
<td width="12%">
</td>
<td width="2%">
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
Beginning of the year</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="12%">
1,564,257</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" width="12%">
11.16</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" width="12%">
10.61</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
Granted</td>
<td align="left" width="1%">
</td>
<td align="right" width="12%">
579,429</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
$</td>
<td align="right" width="12%">
2.55</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
$</td>
<td align="right" width="12%">
1.79</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
Exercised</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="12%">
-</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="12%">
-</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="12%">
-</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
Forfeited</td>
<td align="left" width="1%">
</td>
<td align="right" width="12%">
(117,122</td>
<td align="left" width="2%">
)</td>
<td align="left" width="1%">
$</td>
<td align="right" width="12%">
2.55</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
$</td>
<td align="right" width="12%">
1.79</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
Expired</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
-</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
-</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
-</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
End of the year</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">
</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
2,026,564</td>
<td align="left" width="2%">
</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">
$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
9.19</td>
<td align="left" width="2%">
</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">
$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
10.61</td>
<td align="left" width="2%">
</td>
</tr>
<tr>
<td bgcolor="#e6efff">
</td>
<td bgcolor="#e6efff" width="1%">
</td>
<td bgcolor="#e6efff" width="12%">
</td>
<td bgcolor="#e6efff" width="2%">
</td>
<td bgcolor="#e6efff" width="1%">
</td>
<td bgcolor="#e6efff" width="12%">
</td>
<td bgcolor="#e6efff" width="2%">
</td>
<td bgcolor="#e6efff" width="1%">
</td>
<td bgcolor="#e6efff" width="12%">
</td>
<td bgcolor="#e6efff" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
Options exercisable</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">
</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
1,564,257</td>
<td align="left" width="2%">
</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">
$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
11.16</td>
<td align="left" width="2%">
</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">
$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
10.61</td>
<td align="left" width="2%">
</td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
A summary of the status of the Company’s non-vested shares as of December 31, 2015, and changes during the year ended December 31, 2015, is presented below:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left">
</td>
<td align="left" width="1%">
</td>
<td align="center" nowrap="nowrap" width="12%">
</td>
<td align="left" nowrap="nowrap" width="2%">
</td>
<td align="left" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="12%">
Weighted-</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="left" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="12%">
</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left">
</td>
<td align="center" nowrap="nowrap">
</td>
<td align="left" nowrap="nowrap">
</td>
<td align="left" nowrap="nowrap">
</td>
<td align="center" nowrap="nowrap">
Average Fair</td>
<td align="center" nowrap="nowrap">
</td>
<td align="left" nowrap="nowrap">
</td>
<td align="center" nowrap="nowrap">
Weighted</td>
<td align="left">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left">
</td>
<td align="center" nowrap="nowrap">
</td>
<td align="left" nowrap="nowrap">
</td>
<td align="left" nowrap="nowrap">
</td>
<td align="center" nowrap="nowrap">
Value</td>
<td align="center" nowrap="nowrap">
</td>
<td align="left" nowrap="nowrap">
</td>
<td align="center" nowrap="nowrap">
Average</td>
<td align="left">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid">
</td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid">
Shares</td>
<td align="left" nowrap="nowrap">
</td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid">
</td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid">
Grant Date</td>
<td align="center" nowrap="nowrap">
</td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid">
</td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid">
Exercise Price</td>
<td align="left">
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
<b>Non-vested Shares</b></td>
<td align="left" bgcolor="#e6efff">
</td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap">
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap">
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap">
</td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap">
</td>
<td align="center" bgcolor="#e6efff" nowrap="nowrap">
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap">
</td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap">
</td>
<td align="left" bgcolor="#e6efff">
</td>
</tr>
<tr valign="top">
<td align="left">
Non-vested at January 1, 2015</td>
<td align="left">
</td>
<td align="right" nowrap="nowrap">
462,307</td>
<td align="left" nowrap="nowrap">
</td>
<td align="left" nowrap="nowrap">
$</td>
<td align="right" nowrap="nowrap">
1.71</td>
<td align="center" nowrap="nowrap">
</td>
<td align="left" nowrap="nowrap">
$</td>
<td align="right" nowrap="nowrap">
2.55</td>
<td align="left">
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
Granted</td>
<td align="left" bgcolor="#e6efff">
</td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap">
3,491,419</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap">
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap">
$</td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap">
0.74</td>
<td align="center" bgcolor="#e6efff" nowrap="nowrap">
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap">
$</td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap">
1.08</td>
<td align="left" bgcolor="#e6efff">
</td>
</tr>
<tr valign="top">
<td align="left">
Vested</td>
<td align="left">
</td>
<td align="right" nowrap="nowrap">
(2,158,840</td>
<td align="left" nowrap="nowrap">
)</td>
<td align="left" nowrap="nowrap">
$</td>
<td align="right" nowrap="nowrap">
0.80</td>
<td align="center" nowrap="nowrap">
</td>
<td align="left" nowrap="nowrap">
$</td>
<td align="right" nowrap="nowrap">
1.18</td>
<td align="left">
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
Forfeited</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid">
</td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid">
-</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap">
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid">
</td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid">
-</td>
<td align="center" bgcolor="#e6efff" nowrap="nowrap">
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid">
</td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid">
-</td>
<td align="left" bgcolor="#e6efff">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left">
</td>
<td align="right" nowrap="nowrap">
</td>
<td align="left" nowrap="nowrap">
</td>
<td align="left" nowrap="nowrap">
</td>
<td align="right" nowrap="nowrap">
</td>
<td align="center" nowrap="nowrap">
</td>
<td align="left" nowrap="nowrap">
</td>
<td align="right" nowrap="nowrap">
</td>
<td align="left">
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
Non-vested - December 31, 2015</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double">
</td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 3px double">
1,794,886</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap">
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 3px double">
$</td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 3px double">
0.91</td>
<td align="center" bgcolor="#e6efff" nowrap="nowrap">
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 3px double">
$</td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 3px double">
1.34</td>
<td align="left" bgcolor="#e6efff">
</td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
As of December 31, 2015, there was approximately $1.2 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 2.1 years. The total fair value of shares vested during the years ended December 31, 2015, and 2014, was approximately $1,727,000 and $171,000, respectively.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
The above tables include options issued and outstanding as of December 31, 2015, as follows:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr>
<td valign="top" width="5%">
i)</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt; margin: inherit;">
A total of 255,202 non-qualified 10 year options have been issued, and are outstanding, to advisory board members at exercise prices of $4.50 to $14.40 per share.</p>
</td>
</tr>
<tr>
<td width="5%">
</td>
<td>
</td>
</tr>
<tr>
<td valign="top" width="5%">
ii)</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt; margin: inherit;">
A total of 4,517,259 non-qualified 5 - 10 year options have been issued, and are outstanding, to our directors, officers, and employees at exercise prices of $0.83 to $23.85 per share. From this total, 1,641,432 options are outstanding to the Chief Executive Officer who is also a director, with remaining contractual lives of 0.1 years to 9.9 years. All other options issued to directors, officers, and employees have a remaining contractual life ranging from 0.6 years to 10.0 years.</p>
</td>
</tr>
<tr>
<td width="5%">
</td>
<td>
</td>
</tr>
<tr>
<td valign="top" width="5%">
iii)</td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt; margin: inherit;">
A total of 464,448 non-qualified 3 - 10 year options have been issued, and are outstanding, to our consultants at exercise prices of $0.92 to $15.30 per share.</p>
</td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
The following table provides certain information with respect to the above-referenced stock options that are outstanding and exercisable at December 31, 2015:</p>
<div>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left">
</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" colspan="7" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);">
Stock Options Outstanding</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" colspan="7" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);">
Stock Options Vested</td>
<td align="center" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
Weighted</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
Weighted</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
Average</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
Average</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
Remaining</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
Weighted</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
Remaining</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
Weighted</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
Contractual</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
Number</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
Average</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
Contractual</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
Number</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
Average</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
Life</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
of</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
Exercise</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
Life</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
of</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" width="1%">
</td>
<td align="center" nowrap="nowrap" width="10%">
Exercise</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">
-Years</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">
Awards</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">
Price</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">
-Years</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">
Awards</td>
<td align="center" nowrap="nowrap" width="2%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">
Price</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
Exercise Prices</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="left" bgcolor="#e6efff" width="10%">
</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="left" bgcolor="#e6efff" width="10%">
</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="left" bgcolor="#e6efff" width="10%">
</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="left" bgcolor="#e6efff" width="10%">
</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="left" bgcolor="#e6efff" width="10%">
</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="left" bgcolor="#e6efff" width="10%">
</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
</tr>
<tr>
<td>
</td>
<td width="1%">
</td>
<td width="10%">
</td>
<td width="2%">
</td>
<td width="1%">
</td>
<td width="10%">
</td>
<td width="2%">
</td>
<td width="1%">
</td>
<td width="10%">
</td>
<td width="2%">
</td>
<td width="1%">
</td>
<td width="10%">
</td>
<td width="2%">
</td>
<td width="1%">
</td>
<td width="10%">
</td>
<td width="2%">
</td>
<td width="1%">
</td>
<td width="10%">
</td>
<td width="2%">
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
$0.83 - $1.26</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="10%">
9.6</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="10%">
3,491,419</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" width="10%">
1.08</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="10%">
9.6</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="10%">
1,965,629</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" width="10%">
1.06</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
$2.55 - $5.00</td>
<td align="left" width="1%">
</td>
<td align="right" width="10%">
3.3</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
</td>
<td align="right" width="10%">
645,644</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
$</td>
<td align="right" width="10%">
3.10</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
</td>
<td align="right" width="10%">
3.2</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
</td>
<td align="right" width="10%">
376,548</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
$</td>
<td align="right" width="10%">
3.50</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
$5.01 - $12.90</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="10%">
3.04</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="10%">
668,177</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" width="10%">
7.59</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="10%">
3.04</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="10%">
668,177</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" width="10%">
7.59</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
$13.50 -$18.90</td>
<td align="left" width="1%">
</td>
<td align="right" width="10%">
0.63</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
</td>
<td align="right" width="10%">
191,669</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
$</td>
<td align="right" width="10%">
14.75</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
</td>
<td align="right" width="10%">
0.63</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
</td>
<td align="right" width="10%">
191,669</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
$</td>
<td align="right" width="10%">
14.75</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
$19.20 -$23.85</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="10%">
0.12</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">
240,000</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" width="10%">
23.85</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="10%">
0.12</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">
240,000</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" width="10%">
23.85</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
Total</td>
<td align="left" width="1%">
</td>
<td align="right" width="10%">
7.21</td>
<td align="left" width="2%">
</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">
</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="10%">
5,236,909</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
$</td>
<td align="right" width="10%">
3.70</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
</td>
<td align="right" width="10%">
6.46</td>
<td align="left" width="2%">
</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">
</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="10%">
3,442,023</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
$</td>
<td align="right" width="10%">
4.95</td>
<td align="left" width="2%">
</td>
</tr>
</table>
</div>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
The following table provides certain information with respect to the above-referenced stock options that are outstanding and exercisable at December 31, 2014:</p>
<div>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left">
</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" colspan="7" style="border-bottom: 1px solid rgb(0, 0, 0);">
Stock Options Outstanding</td>
<td align="center" width="2%">
</td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" colspan="7" style="border-bottom: 1px solid rgb(0, 0, 0);">
Stock Options Vested</td>
<td align="center" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left" width="1%">
</td>
<td align="center" width="10%">
Weighted</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
Weighted</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left" width="1%">
</td>
<td align="center" width="10%">
Average</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
Average</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left" width="1%">
</td>
<td align="center" width="10%">
Remaining</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
Weighted</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
Remaining</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
Weighted</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left" width="1%">
</td>
<td align="center" width="10%">
Contractual</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
Number</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
Average</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
Contractual</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
Number</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
Average</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left" width="1%">
</td>
<td align="center" width="10%">
Life</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
of</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
Exercise</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
Life</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
of</td>
<td align="center" width="2%">
</td>
<td align="center" width="1%">
</td>
<td align="center" width="10%">
Exercise</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">
-Years</td>
<td align="center" width="2%">
</td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">
Awards</td>
<td align="center" width="2%">
</td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">
Price</td>
<td align="center" width="2%">
</td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">
-Years</td>
<td align="center" width="2%">
</td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">
Awards</td>
<td align="center" width="2%">
</td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">
Price</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
Exercise Prices</td>
<td align="left" width="1%">
</td>
<td align="left" width="10%">
</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
</td>
<td align="left" width="10%">
</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
</td>
<td align="left" width="10%">
</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
</td>
<td align="left" width="10%">
</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
</td>
<td align="left" width="10%">
</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
</td>
<td align="left" width="10%">
</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
$2.55 - $5.00</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="10%">
4.26</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="10%">
645,644</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" width="10%">
3.10</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="10%">
4.06</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="10%">
183,337</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" width="10%">
4.50</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
$5.01 - $12.90</td>
<td align="left" width="1%">
</td>
<td align="right" width="10%">
4.11</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
</td>
<td align="right" width="10%">
782,584</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
$</td>
<td align="right" width="10%">
7.45</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
</td>
<td align="right" width="10%">
4.11</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
</td>
<td align="right" width="10%">
782,584</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
$</td>
<td align="right" width="10%">
7.45</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
$13.50 -$18.90</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="10%">
1.30</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="10%">
358,336</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" width="10%">
14.17</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="10%">
1.30</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="10%">
358,336</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" width="10%">
14.17</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left">
$19.20 -$23.85</td>
<td align="left" width="1%">
</td>
<td align="right" width="10%">
1.12</td>
<td align="left" width="2%">
</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">
240,000</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
$</td>
<td align="right" width="10%">
23.85</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
</td>
<td align="right" width="10%">
1.12</td>
<td align="left" width="2%">
</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">
</td>
<td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">
240,000</td>
<td align="left" width="2%">
</td>
<td align="left" width="1%">
$</td>
<td align="right" width="10%">
23.85</td>
<td align="left" width="2%">
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
Total</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="10%">
3.31</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">
</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="10%">
2,026,564</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" width="10%">
9.19</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
</td>
<td align="right" bgcolor="#e6efff" width="10%">
3.00</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">
</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="10%">
1,564,257</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
<td align="left" bgcolor="#e6efff" width="1%">
$</td>
<td align="right" bgcolor="#e6efff" width="10%">
11.16</td>
<td align="left" bgcolor="#e6efff" width="2%">
</td>
</tr>
</table>
</div>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
We use the historical volatility of our stock price over the number of years that matches the expected life of our stock option grants or we use the historical volatility of our stock price since January 5, 2006, the date we announced that we were becoming a public company, to estimate the future volatility of our stock. At this time we do not believe that there is a better objective method to predict the future volatility of our stock for options with an expected term that is greater than our stock trading history. Prior to January 1, 2015, we estimated the life of our option awards based on the full contractual term of the option grant. To date we have had very few exercises of our option grants, and those stock option exercises had occurred just before the contractual expiration dates of the option awards. Since the strike price of most of our outstanding awards is greater than the price of our stock, generally awards have expired at the end of the contractual term. For options granted after January 1, 2015, we have applied the simplified method to estimate the expected term of our option grants as it is more likely that these options may be exercised prior to the end of the term. We estimate the effect of future forfeitures of our option grants based on an analysis of historical forfeitures of unvested grants, as we have no better objective basis for that estimate. The expense that we have recognized related to our grants includes the estimate for future pre-vest forfeitures. We will adjust the actual expense recognized due to future pre-vest forfeitures as they occur. We have estimated that 1.5% of our option grants will be forfeited prior to vesting.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Weighted average assumptions used in the Black Scholes option-pricing model for the years ended December 31, 2015 and 2014, were as follows:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left">
</td>
<td align="center" width="14%">
Year ended</td>
<td align="center" width="4%">
</td>
<td align="center" width="14%">
Year ended</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="center" width="14%">
December 31,</td>
<td align="center" width="4%">
</td>
<td align="center" width="14%">
December 31,</td>
</tr>
<tr valign="top">
<td align="left">
</td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="14%">
2015</td>
<td align="center" width="4%">
</td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="14%">
2014</td>
</tr>
<tr>
<td bgcolor="#e6efff">
</td>
<td align="center" bgcolor="#e6efff" width="14%">
</td>
<td align="center" bgcolor="#e6efff" width="4%">
</td>
<td align="center" bgcolor="#e6efff" width="14%">
</td>
</tr>
<tr valign="top">
<td align="left">
Average risk-free interest rate</td>
<td align="center" width="14%">
1.64%</td>
<td align="center" width="4%">
</td>
<td align="center" width="14%">
1.68%</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
Average expected life- years</td>
<td align="center" bgcolor="#e6efff" width="14%">
5.38</td>
<td align="center" bgcolor="#e6efff" width="4%">
</td>
<td align="center" bgcolor="#e6efff" width="14%">
5.0</td>
</tr>
<tr valign="top">
<td align="left">
Expected volatility</td>
<td align="center" width="14%">
86.66%</td>
<td align="center" width="4%">
</td>
<td align="center" width="14%">
90.44%</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
Expected dividends</td>
<td align="center" bgcolor="#e6efff" width="14%">
$0.0</td>
<td align="center" bgcolor="#e6efff" width="4%">
</td>
<td align="center" bgcolor="#e6efff" width="14%">
$0.00</td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Stock-based compensation expense includes the expense related to (1) Grants of stock options, (2) grants of restricted stock, (3) Stock issued as consideration for some of the services provided by our directors and strategic advisory council members, and (4) stock issued in lieu of cash to pay bonuses to our employees and contractors. Grants of stock options and restricted stock are awarded to our employees, directors, consultants, and board members and we recognize the fair value of these awards ratably as they are earned. The expense related to payments in stock for services is recognized as the services are provided.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
Stock-based compensation expense is recorded under the financial statement captions cost of services provided, general and administrative expenses and research and development expenses in the accompanying consolidated statements of operations. For the years ended December 31, 2015 and 2014, we recognized stock-based compensation of approximately $1.9 million and $0.3 million, respectively. Related income tax benefits were not recognized, as we incurred a tax loss for both years.</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" colspan="4">December 31,</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">2015</td>
<td align="center" width="2%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">2014</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
Issued to Investors on July 28, 2010, entitling the holders to purchase
1,034,996
common shares in the Company at an exercise price of $9.00
per common share up to and including July 27, 2017
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
1,034,996
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
1,034,996
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr>
<td> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="12%"> </td>
<td valign="bottom" width="2%"> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="12%"> </td>
<td valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
Issued to Investors on October 25, 2013, entitling the holders to purchase
1,250,000
common shares in the Company at an exercise price of $2.30
per common share up to and including April 24, 2021
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
1,117,178
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="12%">
1,117,178
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr>
<td> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="12%"> </td>
<td valign="bottom" width="2%"> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="12%"> </td>
<td valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
Issued to Investors on November 17, 2014, entitling the holders to purchase
2,734,590
common shares in the Company at an exercise price of $2.31
per common share up to and including May 16, 2022
</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%">
2,734,590
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" valign="bottom" width="12%">
2,734,590
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr>
<td> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="12%"> </td>
<td valign="bottom" width="2%"> </td>
<td valign="bottom" width="1%"> </td>
<td valign="bottom" width="12%"> </td>
<td valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Total</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" valign="bottom" width="12%">
4,886,764
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" valign="bottom" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" valign="bottom" width="12%">
4,886,764
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
</table>
1034996
9.00
1034996
1034996
1250000
2.30
1117178
1117178
2734590
2.31
2734590
2734590
4886764
4886764
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%"> </td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%">Weighted</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%">Weighted</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%"> </td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%">Average</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%">Average</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%">Options</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%">Exercise</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%">Grant Date Fair</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">Outstanding</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">Price</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">Value</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Beginning of the period</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
2,026,564
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="12%">
9.19
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="12%">
10.61
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Granted</td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
3,491,419
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%">$</td>
<td align="right" width="12%">
1.08
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%">$</td>
<td align="right" width="12%">
0.74
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Exercised</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
-
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="12%">
 
-
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="12%">
 
-
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Forfeited</td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
(114,407
</td>
<td align="left" width="2%">)</td>
<td align="left" width="1%">$</td>
<td align="right" width="12%">
6.63
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%">$</td>
<td align="right" width="12%">
6.06
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Expired</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
(166,667
</td>
<td align="left" bgcolor="#e6efff" width="2%">)</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
13.50
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
12.84
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">End of the period</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%"> </td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
5,236,909
</td>
<td align="left" width="2%"> </td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
3.70
</td>
<td align="left" width="2%"> </td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
4.06
</td>
<td align="left" width="2%"> </td>
</tr>
<tr>
<td bgcolor="#e6efff"> </td>
<td bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%"> </td>
<td bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%"> </td>
<td bgcolor="#e6efff" width="2%"> </td>
<td bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%"> </td>
<td bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%"> </td>
<td bgcolor="#e6efff" width="2%"> </td>
<td bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%"> </td>
<td bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%"> </td>
<td bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Options exercisable</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%"> </td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
3,442,023
</td>
<td align="left" width="2%"> </td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
4.95
</td>
<td align="left" width="2%"> </td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
1.68
</td>
<td align="left" width="2%"> </td>
</tr>
</table>
2026564
9.19
10.61
3491419
1.08
0.74
0
0
0
-114407
6.63
6.06
-166667
13.50
12.84
5236909
3.70
4.06
3442023
4.95
1.68
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%"> </td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%">Weighted</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%">Weighted</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%"> </td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%">Average</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%">Average</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%">Options</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%">Exercise</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%">Grant Date Fair</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">Outstanding</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">Price</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">Value</td>
<td align="left" width="2%"> </td>
</tr>
<tr>
<td> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="12%"> </td>
<td width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Beginning of the year</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
1,564,257
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="12%">
11.16
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="12%">
10.61
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Granted</td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
579,429
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%">$</td>
<td align="right" width="12%">
2.55
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%">$</td>
<td align="right" width="12%">
1.79
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Exercised</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
-
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
-
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="12%">
-
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Forfeited</td>
<td align="left" width="1%"> </td>
<td align="right" width="12%">
(117,122
</td>
<td align="left" width="2%">)</td>
<td align="left" width="1%">$</td>
<td align="right" width="12%">
2.55
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%">$</td>
<td align="right" width="12%">
1.79
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Expired</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
-
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
 
-
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%">
 
-
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">End of the year</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%"> </td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
2,026,564
</td>
<td align="left" width="2%"> </td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
9.19
</td>
<td align="left" width="2%"> </td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
10.61
</td>
<td align="left" width="2%"> </td>
</tr>
<tr>
<td bgcolor="#e6efff"> </td>
<td bgcolor="#e6efff" width="1%"> </td>
<td bgcolor="#e6efff" width="12%"> </td>
<td bgcolor="#e6efff" width="2%"> </td>
<td bgcolor="#e6efff" width="1%"> </td>
<td bgcolor="#e6efff" width="12%"> </td>
<td bgcolor="#e6efff" width="2%"> </td>
<td bgcolor="#e6efff" width="1%"> </td>
<td bgcolor="#e6efff" width="12%"> </td>
<td bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Options exercisable</td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%"> </td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
1,564,257
</td>
<td align="left" width="2%"> </td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
11.16
</td>
<td align="left" width="2%"> </td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="12%">
10.61
</td>
<td align="left" width="2%"> </td>
</tr>
</table>
1564257
11.16
10.61
579429
2.55
1.79
0
0
0
-117122
2.55
1.79
0
0
0
10.61
1564257
11.16
10.61
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%"> </td>
<td align="left" nowrap="nowrap" width="2%"> </td>
<td align="left" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%">Weighted-</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="left" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="12%"> </td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left"> </td>
<td align="center" nowrap="nowrap"> </td>
<td align="left" nowrap="nowrap"> </td>
<td align="left" nowrap="nowrap"> </td>
<td align="center" nowrap="nowrap">Average Fair</td>
<td align="center" nowrap="nowrap"> </td>
<td align="left" nowrap="nowrap"> </td>
<td align="center" nowrap="nowrap">Weighted</td>
<td align="left"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left"> </td>
<td align="center" nowrap="nowrap"> </td>
<td align="left" nowrap="nowrap"> </td>
<td align="left" nowrap="nowrap"> </td>
<td align="center" nowrap="nowrap">Value</td>
<td align="center" nowrap="nowrap"> </td>
<td align="left" nowrap="nowrap"> </td>
<td align="center" nowrap="nowrap">Average</td>
<td align="left"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" style="BORDER-BOTTOM: #000000 1px solid"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid">Shares</td>
<td align="left" nowrap="nowrap"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid">Grant Date</td>
<td align="center" nowrap="nowrap"> </td>
<td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid"> </td>
<td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid">Exercise Price</td>
<td align="left"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
<b>Non-vested Shares</b>
</td>
<td align="left" bgcolor="#e6efff"> </td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap"> </td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap"> </td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap"> </td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap"> </td>
<td align="center" bgcolor="#e6efff" nowrap="nowrap"> </td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap"> </td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap"> </td>
<td align="left" bgcolor="#e6efff"> </td>
</tr>
<tr valign="top">
<td align="left">Non-vested at January 1, 2015</td>
<td align="left"> </td>
<td align="right" nowrap="nowrap">
462,307
</td>
<td align="left" nowrap="nowrap"> </td>
<td align="left" nowrap="nowrap">$</td>
<td align="right" nowrap="nowrap">
1.71
</td>
<td align="center" nowrap="nowrap"> </td>
<td align="left" nowrap="nowrap">$</td>
<td align="right" nowrap="nowrap">
2.55
</td>
<td align="left"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Granted</td>
<td align="left" bgcolor="#e6efff"> </td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap">
3,491,419
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap"> </td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap">$</td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap">
0.74
</td>
<td align="center" bgcolor="#e6efff" nowrap="nowrap"> </td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap">$</td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap">
1.08
</td>
<td align="left" bgcolor="#e6efff"> </td>
</tr>
<tr valign="top">
<td align="left">Vested</td>
<td align="left"> </td>
<td align="right" nowrap="nowrap">
(2,158,840
</td>
<td align="left" nowrap="nowrap">)</td>
<td align="left" nowrap="nowrap">$</td>
<td align="right" nowrap="nowrap">
0.80
</td>
<td align="center" nowrap="nowrap"> </td>
<td align="left" nowrap="nowrap">$</td>
<td align="right" nowrap="nowrap">
1.18
</td>
<td align="left"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Forfeited</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid"> </td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid">
-
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap"> </td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid"> </td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid">
-
</td>
<td align="center" bgcolor="#e6efff" nowrap="nowrap"> </td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid"> </td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid">
-
</td>
<td align="left" bgcolor="#e6efff"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left"> </td>
<td align="right" nowrap="nowrap"> </td>
<td align="left" nowrap="nowrap"> </td>
<td align="left" nowrap="nowrap"> </td>
<td align="right" nowrap="nowrap"> </td>
<td align="center" nowrap="nowrap"> </td>
<td align="left" nowrap="nowrap"> </td>
<td align="right" nowrap="nowrap"> </td>
<td align="left"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Non-vested - December 31, 2015</td>
<td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 3px double"> </td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 3px double">
1,794,886
</td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap"> </td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 3px double">$</td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 3px double">
0.91
</td>
<td align="center" bgcolor="#e6efff" nowrap="nowrap"> </td>
<td align="left" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 3px double">$</td>
<td align="right" bgcolor="#e6efff" nowrap="nowrap" style="BORDER-BOTTOM: #000000 3px double">
1.34
</td>
<td align="left" bgcolor="#e6efff"> </td>
</tr>
</table>
462307
1.71
2.55
3491419
0.74
1.08
-2158840
0.80
1.18
0
0
0
1794886
0.91
1.34
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" colspan="7" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);">Stock Options Outstanding</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" colspan="7" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);">Stock Options Vested</td>
<td align="center" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%">Weighted</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%"> </td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%"> </td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%">Weighted</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%"> </td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%"> </td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%">Average</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%"> </td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%"> </td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%">Average</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%"> </td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%"> </td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%">Remaining</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%"> </td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%">Weighted</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%">Remaining</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%"> </td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%">Weighted</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%">Contractual</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%">Number</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%">Average</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%">Contractual</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%">Number</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%">Average</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%">Life</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%">of</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%">Exercise</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%">Life</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%">of</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="10%">Exercise</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">-Years</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">Awards</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">Price</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">-Years</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">Awards</td>
<td align="center" nowrap="nowrap" width="2%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">Price</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Exercise Prices</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="10%"> </td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="10%"> </td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="10%"> </td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="10%"> </td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="10%"> </td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="10%"> </td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr>
<td> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="10%"> </td>
<td width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
$0.83
- $1.26
</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="10%">
9.6
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="10%">
3,491,419
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="10%">
1.08
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="10%">
9.6
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="10%">
1,965,629
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="10%">
1.06
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">
$2.55
- $5.00
</td>
<td align="left" width="1%"> </td>
<td align="right" width="10%">
3.3
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="10%">
645,644
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%">$</td>
<td align="right" width="10%">
3.10
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="10%">
3.2
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="10%">
376,548
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%">$</td>
<td align="right" width="10%">
3.50
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
$5.01
- $12.90
</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="10%">
3.04
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="10%">
668,177
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="10%">
7.59
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="10%">
3.04
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="10%">
668,177
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="10%">
7.59
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">
$13.50
-$18.90
</td>
<td align="left" width="1%"> </td>
<td align="right" width="10%">
0.63
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="10%">
191,669
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%">$</td>
<td align="right" width="10%">
14.75
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="10%">
0.63
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="10%">
191,669
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%">$</td>
<td align="right" width="10%">
14.75
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
$19.20
-$23.85
</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="10%">
0.12
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">
240,000
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="10%">
23.85
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="10%">
0.12
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">
240,000
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="10%">
23.85
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Total</td>
<td align="left" width="1%"> </td>
<td align="right" width="10%">
7.21
</td>
<td align="left" width="2%"> </td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%"> </td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="10%">
5,236,909
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%">$</td>
<td align="right" width="10%">
3.70
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="10%">
6.46
</td>
<td align="left" width="2%"> </td>
<td align="left" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%"> </td>
<td align="right" style="border-bottom: 3px double rgb(0, 0, 0);" width="10%">
3,442,023
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%">$</td>
<td align="right" width="10%">
4.95
</td>
<td align="left" width="2%"> </td>
</tr>
</table>
0.83
1.26
P9Y7M6D
3491419
1.08
P9Y7M6D
1965629
1.06
2.55
5.00
P3Y3M18D
645644
3.10
P3Y2M12D
376548
3.50
5.01
12.90
P3Y14D
668177
7.59
P3Y14D
668177
7.59
13.50
18.90
P0Y7M17D
191669
14.75
P0Y7M17D
191669
14.75
19.20
23.85
P0Y1M13D
240000
23.85
P0Y1M13D
240000
23.85
P7Y2M16D
P6Y5M16D
3442023
4.95
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" colspan="7" style="border-bottom: 1px solid rgb(0, 0, 0);">Stock Options Outstanding</td>
<td align="center" width="2%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" colspan="7" style="border-bottom: 1px solid rgb(0, 0, 0);">Stock Options Vested</td>
<td align="center" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" width="10%">Weighted</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%"> </td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%"> </td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%">Weighted</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%"> </td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%"> </td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" width="10%">Average</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%"> </td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%"> </td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%">Average</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%"> </td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%"> </td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" width="10%">Remaining</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%"> </td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%">Weighted</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%">Remaining</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%"> </td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%">Weighted</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" width="10%">Contractual</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%">Number</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%">Average</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%">Contractual</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%">Number</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%">Average</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" width="10%">Life</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%">of</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%">Exercise</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%">Life</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%">of</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="10%">Exercise</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">-Years</td>
<td align="center" width="2%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">Awards</td>
<td align="center" width="2%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">Price</td>
<td align="center" width="2%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">-Years</td>
<td align="center" width="2%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">Awards</td>
<td align="center" width="2%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">Price</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Exercise Prices</td>
<td align="left" width="1%"> </td>
<td align="left" width="10%"> </td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="10%"> </td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="10%"> </td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="10%"> </td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="10%"> </td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="10%"> </td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
$2.55
- $5.00
</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="10%">
4.26
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="10%">
645,644
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="10%">
3.10
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="10%">
4.06
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="10%">
183,337
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="10%">
4.50
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">
$5.01
- $12.90
</td>
<td align="left" width="1%"> </td>
<td align="right" width="10%">
4.11
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="10%">
782,584
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%">$</td>
<td align="right" width="10%">
7.45
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="10%">
4.11
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="10%">
782,584
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%">$</td>
<td align="right" width="10%">
7.45
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">
$13.50
-$18.90
</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="10%">
1.30
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="10%">
358,336
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="10%">
14.17
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="10%">
1.30
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="10%">
358,336
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="10%">
14.17
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">
$19.20
-$23.85
</td>
<td align="left" width="1%"> </td>
<td align="right" width="10%">
1.12
</td>
<td align="left" width="2%"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">
240,000
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%">$</td>
<td align="right" width="10%">
23.85
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%"> </td>
<td align="right" width="10%">
1.12
</td>
<td align="left" width="2%"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="10%">
240,000
</td>
<td align="left" width="2%"> </td>
<td align="left" width="1%">$</td>
<td align="right" width="10%">
23.85
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Total</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="10%">
3.31
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="10%">
2,026,564
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="10%">
9.19
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="10%">
3.00
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%"> </td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="10%">
1,564,257
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="10%">
11.16
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
</table>
2.55
5.00
P4Y3M4D
645644
3.10
P4Y22D
183337
4.50
5.01
12.90
P4Y1M10D
782584
7.45
P4Y1M10D
782584
7.45
13.50
18.90
P1Y3M18D
358336
14.17
P1Y3M18D
358336
14.17
19.20
23.85
P1Y1M13D
240000
23.85
P1Y1M13D
240000
23.85
P3Y3M22D
P3Y
1564257
11.16
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left"> </td>
<td align="center" width="14%">Year ended</td>
<td align="center" width="4%"> </td>
<td align="center" width="14%">Year ended</td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="center" width="14%">December 31,</td>
<td align="center" width="4%"> </td>
<td align="center" width="14%">December 31,</td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="14%">2015</td>
<td align="center" width="4%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="14%">2014</td>
</tr>
<tr>
<td bgcolor="#e6efff"> </td>
<td align="center" bgcolor="#e6efff" width="14%"> </td>
<td align="center" bgcolor="#e6efff" width="4%"> </td>
<td align="center" bgcolor="#e6efff" width="14%"> </td>
</tr>
<tr valign="top">
<td align="left">Average risk-free interest rate</td>
<td align="center" width="14%">
1.64%
</td>
<td align="center" width="4%"> </td>
<td align="center" width="14%">
1.68%
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Average expected life- years</td>
<td align="center" bgcolor="#e6efff" width="14%">
5.38
</td>
<td align="center" bgcolor="#e6efff" width="4%"> </td>
<td align="center" bgcolor="#e6efff" width="14%">
5.0
</td>
</tr>
<tr valign="top">
<td align="left">Expected volatility</td>
<td align="center" width="14%">
86.66%
</td>
<td align="center" width="4%"> </td>
<td align="center" width="14%">
90.44%
</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Expected dividends</td>
<td align="center" bgcolor="#e6efff" width="14%">
$0.0
</td>
<td align="center" bgcolor="#e6efff" width="4%"> </td>
<td align="center" bgcolor="#e6efff" width="14%">
$0.00
</td>
</tr>
</table>
0.0164
0.0168
P5Y4M17D
P5Y
0.8666
0.9044
0.00
0.0000
28752630
24996202
10000000
3600000
100000
250000
0.30
0.95
300000
276000
0.92
5800000
246083
282000
2878516
2734590
5000000
0.95
1.75
2.31
0.0499
0.1999
4500000
132822
2.30
306000
3000000
-1500000
1881000
262000
463192
148845
47017
3968
1.26
135880
1.26
1129135
0.92
2981
1775
1310
8368
1.00
1.25
1812
1536
1803
8255
9752
0.83
1.25
P1Y6M
P5Y
P3Y
P10Y
0.25
0.91
0.0055
0.0192
0.76
0.88
0
550972
79588
661222
0.92
1.26
0.67
0.91
0.0155
0.0187
0.86
0.87
P10Y
0
0.69
0.72
0.015
112996
23024
97988
0.92
1.26
0.65
0.88
0.0146
0.0179
0.86
0.87
P5Y6M
P10Y
0
579429
1.79
2.55
P5Y
0.0168
0.9044
0.00
0.52
0.015
1200000
P2Y1M6D
1727000
171000
255202
P10Y
4.50
14.40
4517259
P5Y
P10Y
0.83
23.85
1641432
P0Y1M6D
P9Y10M24D
P0Y7M6D
P10Y
464448
P3Y
P10Y
0.92
15.30
0.015
1900000
300000
Requires shareholder approval of a transaction other than a public offering involving the sale, issuance, or potential issuance by a company of common stock (or securities convertible into or exercisable for common stock) equal to 20% or more of the common stock, or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the stock.
0
P6Y
0
300000
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Note 12. Business Segment Results</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">We have two principal business segments, which are (1) our technology business and (2) our consulting services business. These business segments were determined based on the nature of the operations and the services offered. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief decision-makers, in deciding how to allocate resources and in assessing performance. Our Chief Executive Officer and Chief Financial Officer have been identified as the chief operating decision makers. Our chief operating decision makers direct the allocation of resources to operating segments based on the profitability, the cash flows, and the business plans of each respective segment.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>BUSINESS SEGMENT RESULTS - YEARS ENDED DECEMBER 31, 2015 AND 2014</b>
</p>
<div>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" width="8%"> </td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%"> </td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%"> </td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%"> </td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" colspan="4">Corporate and</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%"> </td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%"> </td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" colspan="4">Consulting</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" colspan="4">Technology</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" colspan="4">Eliminations</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" colspan="4">Total</td>
<td align="right" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" width="8%">2015</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%">2014</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%">2015</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%">2014</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%">2015</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%">2014</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%">2015</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%">2014</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Revenue</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
910,531
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
1,310,199
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
 
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
 
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
 
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
 
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
910,531
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
1,310,199
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Segment Profit - Pre Tax</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="8%">
(267,671
</td>
<td align="left" valign="bottom" width="2%">)</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="8%">
406,078
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="8%">
(1,484,164
</td>
<td align="left" valign="bottom" width="2%">)</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="8%">
(1,534,605
</td>
<td align="left" valign="bottom" width="2%">)</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="8%">
(2,566,315
</td>
<td align="left" valign="bottom" width="2%">)</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="8%">
(2,525,787
</td>
<td align="left" valign="bottom" width="2%">)</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="8%">
(4,318,150
</td>
<td align="left" valign="bottom" width="2%">)</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="8%">
(3,654,314
</td>
<td align="left" valign="bottom" width="2%">)</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Total Assets</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
139,797
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
469,086
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
950,594
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
833,560
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
1,117,045
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
4,750,591
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
2,207,436
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
6,053,237
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
</table>
</div>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" width="8%"> </td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%"> </td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%"> </td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%"> </td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" colspan="4">Corporate and</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%"> </td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%"> </td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" colspan="4">Consulting</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" colspan="4">Technology</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" colspan="4">Eliminations</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" colspan="4">Total</td>
<td align="right" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="center" width="8%">2015</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%">2014</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%">2015</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%">2014</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%">2015</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%">2014</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%">2015</td>
<td align="center" width="2%"> </td>
<td align="center" width="1%"> </td>
<td align="center" width="8%">2014</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Revenue</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
910,531
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
1,310,199
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
 
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
 
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
 
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
 
-
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
910,531
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
1,310,199
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Segment Profit - Pre Tax</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="8%">
(267,671
</td>
<td align="left" valign="bottom" width="2%">)</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="8%">
406,078
</td>
<td align="left" valign="bottom" width="2%"> </td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="8%">
(1,484,164
</td>
<td align="left" valign="bottom" width="2%">)</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="8%">
(1,534,605
</td>
<td align="left" valign="bottom" width="2%">)</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="8%">
(2,566,315
</td>
<td align="left" valign="bottom" width="2%">)</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="8%">
(2,525,787
</td>
<td align="left" valign="bottom" width="2%">)</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="8%">
(4,318,150
</td>
<td align="left" valign="bottom" width="2%">)</td>
<td align="left" valign="bottom" width="1%">$</td>
<td align="right" valign="bottom" width="8%">
(3,654,314
</td>
<td align="left" valign="bottom" width="2%">)</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Total Assets</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
139,797
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
469,086
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
950,594
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
833,560
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
1,117,045
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
4,750,591
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
2,207,436
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td>
<td align="right" bgcolor="#e6efff" valign="bottom" width="8%">
6,053,237
</td>
<td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td>
</tr>
</table>
910531
1310199
0
0
0
0
-267671
406078
-1484164
-1534605
-2566315
-2525787
-4318150
-3654314
139797
469086
950594
833560
1117045
4750591
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Note 13. Fair Value Measurements</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">We adopted the accounting guidance on fair value measurements for financial assets and liabilities measured on a recurring basis. The guidance requires fair value measurements be classified and disclosed in one of the following three categories:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td width="5%"> </td>
<td align="left">
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt; margin: inherit;">Level 1</p>
</td>
<td align="left" width="85%">
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt; margin: inherit;">Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;</p>
</td>
</tr>
<tr>
<td width="5%"> </td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt; margin: inherit;"> </p>
</td>
<td width="85%"> </td>
</tr>
<tr valign="top">
<td width="5%"> </td>
<td align="left">
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt; margin: inherit;">Level 2</p>
</td>
<td align="left" width="85%">
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt; margin: inherit;">Quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability;</p>
</td>
</tr>
<tr>
<td width="5%"> </td>
<td>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt; margin: inherit;"> </p>
</td>
<td width="85%"> </td>
</tr>
<tr valign="top">
<td width="5%"> </td>
<td align="left">
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt; margin: inherit;">Level 3</p>
</td>
<td align="left" width="85%">
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt; margin: inherit;">Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).</p>
</td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Annually, the board of directors assess and approve the fair value measurement policies and procedures. At least annually, the finance department determines if the current valuation techniques used in the fair value measurements are still appropriate and evaluates and adjusts the unobservable inputs used in the fair value measurements based on current market conditions and third-party information. The following fair value hierarchy table presents information about each major category of the Company’s financial liability measured at fair value on a recurring basis as of December 31, 2015 and 2014:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left">($ rounded to nearest thousand)</td>
<td align="left" width="1%"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" colspan="10" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);">Fair value measurement using</td>
<td align="left" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">Quoted prices</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">Significant</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">Significant</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%"> </td>
<td align="left" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">in</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">other</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">unobservable</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%"> </td>
<td align="left" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">active markets</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">observable</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">inputs</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%"> </td>
<td align="left" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);"> </td>
<td align="left" width="1%"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">(Level 1)</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">inputs (Level 2)</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">(Level 3)</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">Total</td>
<td align="left" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Balance at December 31, 2015</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left">Liabilities:</td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="11%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="11%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="11%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="11%"> </td>
<td align="left" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Warrant liability</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="11%">
 
-
</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="11%">
 
-
</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="11%">
2,327,000
</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="11%">
2,327,000
</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
</tr>
</table>
<br/>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left">($ rounded to nearest thousand)</td>
<td align="left" width="1%"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" colspan="10" style="border-bottom: 1px solid rgb(0, 0, 0);">Fair value measurement using</td>
<td align="center" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">Quoted prices</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">Significant</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">Significant</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%"> </td>
<td align="center" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">in</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">other</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">unobservable</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%"> </td>
<td align="center" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">active markets</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">observable</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">inputs</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%"> </td>
<td align="center" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);"> </td>
<td align="left" width="1%"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">(Level 1)</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">inputs (Level 2)</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">(Level 3)</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">Total</td>
<td align="center" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Balance at December 31, 2014</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left">Liabilities:</td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="11%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="11%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="11%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="11%"> </td>
<td align="left" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Warrant liability</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="11%">
 
-
</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="11%">
 
-
</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="11%">
4,633,000
</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="11%">
4,633,000
</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The reconciliation of warrant liability measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows:</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left">($ rounded to nearest thousand)</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="17%">Warrant Liability</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td>
</tr>
<tr>
<td> </td>
<td width="1%"> </td>
<td width="17%"> </td>
<td width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Balance at December 31, 2013</td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="17%">
1,711,000
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Issuance of additional warrants</td>
<td align="left" width="1%"> </td>
<td align="right" width="17%">
4,416,000
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Exercise of warrants</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="17%">
(331,000
</td>
<td align="left" bgcolor="#e6efff" width="2%">)</td>
</tr>
<tr valign="top">
<td align="left">Change in fair value of warrant liability</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="17%">
(1,163,000
</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%">)</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Balance at December 31, 2014</td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="17%">
4,633,000
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Issuance of additional warrants</td>
<td align="left" width="1%"> </td>
<td align="right" width="17%">
-
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Exercise of warrants</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="17%">
-
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Change in fair value of warrant liability</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="17%">
(2,306,000
</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%">)</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Balance at December 31, 2015</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="17%">
2,327,000
</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="2%"> </td>
</tr>
</table>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The fair value of the warrant liability is based on Level 3 inputs. For this liability, the Company developed its own assumptions that do not have observable inputs or available market data to support the fair value. See Note 10 for further discussion of the warrant liability. Significant increases (decreases) in any of those Level 3 inputs in isolation would result in a significantly lower (higher) fair value measurement.</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">We believe that the fair values of its current assets and current liabilities approximate their reported carrying amounts. There were no transfers between Level 1, 2 and 3.</p>
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left">($ rounded to nearest thousand)</td>
<td align="left" width="1%"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" colspan="10" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);">Fair value measurement using</td>
<td align="left" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">Quoted prices</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">Significant</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">Significant</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%"> </td>
<td align="left" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">in</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">other</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">unobservable</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%"> </td>
<td align="left" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">active markets</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">observable</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">inputs</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%"> </td>
<td align="left" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);"> </td>
<td align="left" width="1%"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">(Level 1)</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">inputs (Level 2)</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">(Level 3)</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">Total</td>
<td align="left" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Balance at December 31, 2015</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left">Liabilities:</td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="11%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="11%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="11%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="11%"> </td>
<td align="left" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Warrant liability</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="11%">
 
-
</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="11%">
 
-
</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="11%">
2,327,000
</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="11%">
2,327,000
</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
</tr>
</table>
0
0
2327000
2327000
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left">($ rounded to nearest thousand)</td>
<td align="left" width="1%"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" colspan="10" style="border-bottom: 1px solid rgb(0, 0, 0);">Fair value measurement using</td>
<td align="center" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">Quoted prices</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">Significant</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">Significant</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%"> </td>
<td align="center" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">in</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">other</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">unobservable</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%"> </td>
<td align="center" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">active markets</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">observable</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%">inputs</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" width="11%"> </td>
<td align="center" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);"> </td>
<td align="left" width="1%"> </td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">(Level 1)</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">inputs (Level 2)</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">(Level 3)</td>
<td align="center" nowrap="nowrap" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="11%">Total</td>
<td align="center" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Balance at December 31, 2014</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" width="11%"> </td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left">Liabilities:</td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="11%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="11%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="11%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="1%"> </td>
<td align="left" width="11%"> </td>
<td align="left" width="1%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Warrant liability</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="11%">
 
-
</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="11%">
 
-
</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="11%">
4,633,000
</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="11%">
4,633,000
</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
</tr>
</table>
0
0
4633000
4633000
<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%">
<tr valign="top">
<td align="left">($ rounded to nearest thousand)</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="center" style="border-bottom: 1px solid rgb(0, 0, 0);" width="17%">Warrant Liability</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> </td>
</tr>
<tr>
<td> </td>
<td width="1%"> </td>
<td width="17%"> </td>
<td width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Balance at December 31, 2013</td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="17%">
1,711,000
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Issuance of additional warrants</td>
<td align="left" width="1%"> </td>
<td align="right" width="17%">
4,416,000
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Exercise of warrants</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="17%">
(331,000
</td>
<td align="left" bgcolor="#e6efff" width="2%">)</td>
</tr>
<tr valign="top">
<td align="left">Change in fair value of warrant liability</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="17%">
(1,163,000
</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%">)</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Balance at December 31, 2014</td>
<td align="left" bgcolor="#e6efff" width="1%">$</td>
<td align="right" bgcolor="#e6efff" width="17%">
4,633,000
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Issuance of additional warrants</td>
<td align="left" width="1%"> </td>
<td align="right" width="17%">
-
</td>
<td align="left" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Exercise of warrants</td>
<td align="left" bgcolor="#e6efff" width="1%"> </td>
<td align="right" bgcolor="#e6efff" width="17%">
-
</td>
<td align="left" bgcolor="#e6efff" width="2%"> </td>
</tr>
<tr valign="top">
<td align="left">Change in fair value of warrant liability</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> </td>
<td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="17%">
(2,306,000
</td>
<td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%">)</td>
</tr>
<tr valign="top">
<td align="left" bgcolor="#e6efff">Balance at December 31, 2015</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="1%">$</td>
<td align="right" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="17%">
2,327,000
</td>
<td align="left" bgcolor="#e6efff" style="border-bottom: 3px double rgb(0, 0, 0);" width="2%"> </td>
</tr>
</table>
1711000
4416000
-331000
-1163000
4633000
0
0
-2306000
2327000
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
<b>Note 14. Subsequent Events</b>
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
In 2016 we sold
2.1
million common shares for total gross proceeds of approximately $1.2
million through the equity line financing arrangement with Aspire Capital that we have in place (See Note 11 – Stockholders’ Equity).
</p>
<p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">
On March 14, 2016, we entered into a joint development agreement (“JD”) with AREVA NP (“Areva”) to develop a joint business plan to evaluate the technical, economic, and strategic feasibility and desirability of the parties’ forming one or more joint venture companies to further develop, manufacture, and commercialize the Company’s metallic nuclear fuel technology. The JD agreement includes a statement of work whereby the Company is expected to pay a total of approximately $141,000
toward the total cost of work to be performed as part of the Joint Evaluation Project Plan by placing a work release or purchase order with Areva. The total amount is due and payable by the Company as follows:
40% of the total amount due upon the effective date of the signing of the JD;
30% of the total amount due upon the delivery of an intermediate report by Areva and the remaining
30% due upon the delivery of the final report to the Company.
</p>
2100000
1200000
141000