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<div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <table style="MARGIN-TOP: 0px; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0px; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0"> <tr style="TEXT-ALIGN: justify; VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: left; WIDTH: 0.25in"> <div><b>4.</b></div> </td> <td style="TEXT-ALIGN: justify"> <div><b>Accounts Payable</b></div> </td> </tr> </table> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">As of June 30, 2014, Current Liabilities included accounts payable of $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">78,915</font> comprised primarily of approximate amounts owed totaling $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">43,277</font> to the Company’s auditors for work on the annual audit, $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">15,250</font> owed to the Company’s drug substance manufacturer, $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">18,150</font> to suppliers of services used in the clinical trial and other miscellaneous items totaling $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">2,238</font>. As of June 30, 2014 accounts payable related party consisted of $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">3,213</font> for current patent expenses for the License Agreement. By the first week of August 2014, the June 30, 2014 amounts included in accounts payable and accounts payable related party had been substantially paid. As of December 31, 2013, Current Liabilities included accounts payable $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">76,109</font>, which amounts were subsequently paid in 2014.</div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table>
<div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <table style="MARGIN-TOP: 0px; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0px; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0"> <tr style="TEXT-ALIGN: justify; VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: left; WIDTH: 0.25in"> <div><b>5.</b></div> </td> <td style="TEXT-ALIGN: justify"> <div><b>Accrued Expense</b></div> </td> </tr> </table> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">As of June 30, 2014, Current Liabilities included accrued expense of $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">149,341</font> for clinical trial expense, advisory fees and management bonus accrual. Current Liabilities as of June 30, 2014 also included accrued expense related party of $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">52,050</font> for MD Anderson clinical trial hospital expense. (See Note 2.). As of December 31, 2013, Current Liabilities included accrued expense of $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">66,739</font> and accrued expense related party of $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">52,050</font>.</div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table>
<div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <table style="MARGIN-TOP: 0px; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0px; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0"> <tr style="TEXT-ALIGN: justify; VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: left; WIDTH: 0.25in"> <div><b>6.</b></div> </td> <td style="TEXT-ALIGN: justify"> <div><b>Accrued License Payments – Related Party</b></div> </td> </tr> </table> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">Accrued license payments related party totaling $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">50,000</font> and $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">100,000</font> were included in Current Liabilities as of June 30, 2014 and December 31, 2013, respectively. The amount included for June 30, 2014 represents reimbursement of past patent expenses incurred by MD Anderson prior to the Bio-Path license and the amount included for December 31, 2013 included past patent expenses and the annual maintenance fee for the License Agreement.</div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table>
<div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <table style="MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0" width="100%"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 0.25in"> <div><b>7.</b></div> </td> <td style="TEXT-ALIGN: justify"> <div><b>Stockholders’ Equity</b></div> </td> </tr> </table> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"><b><i> </i></b></div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"><b><i>Issuance of Common Stock</i></b> – In May and June of 2007, the Company issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 6,505,994</font></font> shares of common stock for $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">6,506</font></font> in cash to founders of the Company. In August of 2007, the Company issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 3,975,000</font> shares of common stock for $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">993,750</font> in cash to investors in the Company pursuant to a private placement memorandum. In August of 2007 the Company issued an additional <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 1,333,334</font> shares of common stock for $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">1,000,000</font> in cash to investors in the Company pursuant to a second round of financing. The Company issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 530,833</font> in common stock to the Placement Agent as commission for the shares of common stock sold to investors. In November of 2007, the Company issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 3,138,889</font> shares in common stock to MD Anderson as partial consideration for its two technology licenses from MD Anderson.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In February of 2008, the Company completed a reverse merger with Ogden Golf Co. Corporation and issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 38,023,578</font> shares of common stock of the public company Bio-Path Holdings (formerly Ogden Golf Co. Corporation) in exchange for pre-merger common stock of Bio-Path, Inc. In addition, shareholders of Ogden Golf Co. Corporation retained <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 3,600,000</font> shares of common stock of Bio-Path Holdings. In February of 2008 Bio-Path issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 80,000</font> shares of common stock to strategic consultants pursuant to executed agreements and the fair value was expensed upfront as common stock for services. In April of 2008, the Company issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 200,000</font> shares of common stock to a firm in connection with introducing Bio-Path, Inc. to its merger partner Ogden Golf Co. Corporation. The fair value of this stock issuance was expensed upfront as common stock for services valued at $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">180,000</font>. In April of 2008, the Company recorded an additional <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">24</font> shares for rounding in accordance with FINRA rules. In December of 2008, the Company issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 100,000</font> shares of common stock to an investor relations firm for services. The fair value of this stock issuance was expensed upfront as common stock for services valued at $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">40,000</font>. There were no issuances of shares during the first quarter of 2009. In June of 2009, the Company issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 660,000</font> shares of common stock and warrants to purchase an additional <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 660,000</font> shares of common stock for $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">165,000</font> in cash to investors in the Company pursuant to a private placement memorandum. The warrants must be exercised within two years from the date of issuance. The exercise price of the warrants is $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">1.50</font> a share. In connection with this private placement, the Company issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 66,000</font> shares of common stock to the Placement Agent as commission for the shares of common stock sold to investors. There were no issuances of shares during the fourth quarter of 2009.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In November and December of 2009, the Company sold shares of common stock and warrants to purchase shares of common stock for $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">675,000</font></font> in cash to investors pursuant to a private placement memorandum. These shares were not issued by the December 31, 2009 year end. In January 2010, the Company issued these investors <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 2,700,000</font> shares of common stock and warrants to purchase an additional <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 2,700,000</font> shares of common stock. The warrants must be exercised within two years from the date of issuance. The exercise price of the warrants is $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">1.50</font> a share. In January 2010, the Company also sold an additional <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 900,000</font> shares of common stock and warrants to purchase an additional <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 900,000</font> shares of common stock for $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">225,000</font> in cash to investors in the Company pursuant to a private placement memorandum. The warrants must be exercised within two years from the date of issuance and the exercise price is $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">1.50</font> a share. In connection with these private placement sales of equity, the Company issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 360,000</font> shares of common stock to the Placement Agent as commission for the shares of common stock sold to investors.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In May of 2010, the Company issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 780,000</font> shares of common stock and warrants to purchase an additional <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 780,000</font> shares of common stock for $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">273,000</font> in cash to investors in the Company pursuant to a private placement memorandum. The warrants must be exercised within two years from the date of issuance. The exercise price of the warrants is $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">1.50</font> a share. In connection with this private placement, the Company issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 78,000</font> shares of common stock to the Placement Agent as commission for the shares of common stock sold to investors.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In June of 2010, the Company signed an equity purchase agreement for up to $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">7</font> million with Lincoln Park Capital Fund, LLC (“LPC” or “Lincoln”), a Chicago-based institutional investor. Under the terms of the equity purchase agreement, the Company has the right to sell shares of its common stock to LPC from time to time over a 24-month period in amounts between $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">50,000</font> and $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">1,000,000</font> up to an aggregate amount of $7 million depending upon certain conditions set forth in the purchase agreement including that a registration statement related to the transaction has been declared effective by the U.S. Securities and Exchange Commission (“SEC”). As a result, a registration statement was filed and later declared effective by the SEC on July 12, 2010. Upon signing the agreement, the Company received $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">200,000</font> from LPC as an initial purchase in exchange for <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 571,429</font> shares (“Initial Purchase Shares”) of the Company’s common stock and warrants to purchase <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 571,429</font> shares of the Company’s common stock at an exercise price of $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">1.50</font> per share. Subsequent purchases of the Company’s common stock by Lincoln Park under the agreement do not include warrants. In connection with the signing of the LPC financing agreement, the Company issued LPC <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 12,000</font> shares of the Company’s common stock for its due diligence efforts and <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 566,801</font> shares of the Company’s common stock as a commitment fee for the balance of the $7 million equity purchase commitment.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In July of 2010, the Company received $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">150,000</font> from LPC in exchange for <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 375,000</font> shares of the Company’s common stock. LPC was also issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 6,251</font> shares of the Company’s common stock as a commitment fee in connection with the purchase of the 375,000 shares of common stock. No warrants to purchase additional shares of common stock of the Company were issued to Lincoln in connection with the sale of the common stock.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In September of 2010, the Company received $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">50,000</font> from LPC in exchange for <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 125,000</font> shares of the Company’s common stock. LPC was also issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 2,084</font> shares of the Company’s common stock as a commitment fee in connection with the purchase of the 125,000 shares of common stock. No warrants to purchase additional shares of common stock of the Company were issued to Lincoln in connection with the sale of the common stock.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In October of 2010, the Company received $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">50,000</font> from LPC in exchange for <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 135,135</font> shares of the Company’s common stock. LPC was also issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 2,084</font> shares of the Company’s common stock as a commitment fee in connection with the purchase of the 135,135 shares of common stock. No warrants to purchase additional shares of common stock of the Company were issued to Lincoln in connection with the sale of the common stock.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In November of 2010, the Company received $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">50,000</font> from LPC in exchange for <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 135,135</font> shares of the Company’s common stock. LPC was also issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 2,084</font> shares of the Company’s common stock as a commitment fee in connection with the purchase of the 135,135 shares of common stock. No warrants to purchase additional shares of common stock of the Company were issued to Lincoln in connection with the sale of the common stock.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">From November 2010 through April of 2011 the Company sold shares of common stock for $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">1,794,205</font> in cash to investors pursuant to a private placement memorandum. In June of 2011, the Company issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 5,980,685</font> shares of common stock to these investors. In connection with this private placement, in June of 2011 the Company issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 598,069</font> shares of common stock to the Placement Agent as commission for the shares of common stock sold to investors. No warrants to purchase additional shares of common stock of the Company were issued to these investors in connection with the sale of the common stock.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In June of 2011, the Company received $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">50,000</font> from LPC in exchange for <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 164,853</font> shares of the Company’s common stock. LPC was also issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 2,084</font> shares of the Company’s common stock as a commitment fee in connection with the purchase of the 164,853 shares of common stock. No warrants to purchase additional shares of common stock of the Company were issued to Lincoln in connection with the sale of the common stock.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In October of 2011, the Company issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 1,920,000</font> shares of common stock for $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">576,000</font> to investors who exercised warrants from September to October 2011.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In November of 2011, the Company received $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">25,000</font> from LPC in exchange for <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 83,333</font> shares of the Company’s common stock. LPC was also issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 1,042</font> shares of the Company’s common stock as a commitment fee in connection with the purchase of the 83,333 shares of common stock. No warrants to purchase additional shares of common stock of the Company were issued to Lincoln in connection with the sale of the common stock.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In December of 2011, the Company received $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">50,000</font> from LPC in exchange for <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 172,414</font> shares of the Company’s common stock. LPC was also issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 2,084</font> shares of the Company’s common stock as a commitment fee in connection with the purchase of the 172,414 shares of common stock. No warrants to purchase additional shares of common stock of the Company were issued to Lincoln in connection with the sale of the common stock.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In March of 2012, the Company received $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">50,000</font> from LPC in exchange for <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 166,667</font> shares of the Company’s common stock. LPC was also issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 2,084</font> shares of the Company’s common stock as a commitment fee in connection with the purchase of the 166,667 shares of common stock. No warrants to purchase additional shares of common stock of the Company were issued to Lincoln in connection with the sale of the common stock.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In April of 2012, LPC made three separate purchases of the Company’s common stock. The Company received $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">25,000</font> from LPC in exchange for <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 89,286</font> shares of the Company’s common stock. LPC was also issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 1,042</font> shares of the Company’s common stock as a commitment fee in connection with the purchase of the 89,286 shares of common stock. The Company received another $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">25,000</font> from LPC in exchange for <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 96,154</font> shares of the Company’s common stock. LPC was also issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 1,042</font> shares of the Company’s common stock as a commitment fee in connection with the purchase of the 96,154 shares of common stock. Finally, the Company received $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">50,000</font> from LPC in exchange for <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 185,185</font> shares of the Company’s common stock. LPC was also issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 2,084</font> shares of the Company’s common stock as a commitment fee in connection with the purchase of the 185,185 shares of common stock. No warrants to purchase additional shares of common stock of the Company were issued to Lincoln in connection with the sale of the common stock.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In June of 2012, the Company sold $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">150,000</font> in shares of its common stock pursuant to a private placement, with shares to be issued, and $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">18,500</font> in shares of its common stock for services with shares to be issued.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In August of 2012, the Company issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 50,000</font> shares of its common stock for the $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">18,500</font> shares for services previously recognized in June 2012.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In July through September of 2012, the Company sold $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">795,001</font> in shares of its common stock pursuant to a private placement, with shares to be issued.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In October through December of 2012, the Company sold $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">708,600</font> in shares of its common stock pursuant to a private placement, with shares to be issued.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">As of December 31, 2012 the Company issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 3,300,337</font> shares of its common stock to investors who purchased shares of common stock from the period June through September of 2012.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In February and March of 2013, the Company sold $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">346,202</font> in shares of its common stock pursuant to a private placement, with shares to be issued.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In April and May of 2013, the Company sold $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">2,000,198</font> in shares of its common stock pursuant to a private placement, with shares to be issued, and $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">489,501</font> in shares of its common stock pursuant in a direct offering, with shares to be issued.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In June of 2013, the Company issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 11,664,665</font> shares of common stock to investors in connection with the private placement and direct offering. In June of 2013 the Company issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 1,496,499</font> shares of common stock to the Placement Agent as commission for the shares of common stock sold to investors. No warrants to purchase additional shares of common stock of the Company were issued to these investors or to the Placement Agent in connection with the sale of the common stock.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In August and September of 2013, the Company sold $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">3,220,966</font> in shares of its common stock pursuant to a private placement, with shares to be issued.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In November of 2013, the Company issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 8,052,416</font> shares of common stock to investors in connection with the private placement. In November of 2013 the Company issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 805,242</font> shares of common stock to the Placement Agent as commission for the shares of common stock sold to investors. No warrants to purchase additional shares of common stock of the Company were issued to these investors or to the Placement Agent in connection with the sale of the common stock.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt">  </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In January of 2014, the Company issued a total of <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 5,000,000</font> shares of the Company’s common stock and warrants to purchase <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 2,500,000</font> shares of the Company’s common stock for aggregate gross proceeds of $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">15,000,000</font>. The warrants are exercisable for a period of five years from the date of issuance. The exercise price of the warrants is $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">4.74</font> a share.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">As of June 30, 2014, there were <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">89,237,872</font></font> shares of common stock issued and outstanding. There are no preferred shares outstanding as of June 30, 2014.</div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table>
<div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <table style="MARGIN-TOP: 0px; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0px; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0"> <tr style="TEXT-ALIGN: justify; VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: left; WIDTH: 0.25in"> <div style="CLEAR:both;CLEAR: both"><b>8.</b></div> </td> <td style="TEXT-ALIGN: justify"> <div style="CLEAR:both;CLEAR: both"><b>Stock Options and Warrants</b></div> </td> </tr> </table> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"><b><i>Stock Options</i></b></div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In April of 2014, the Company made a stock option grant to purchase <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 25,000</font> shares of the Company’s common stock for services rendered by a director of the Company. Terms of the stock option grant require, among other things, that the individual continues to provide services over the vesting period of the option, which is one year from the date of grant for the director service stock option. The exercise price of the option is $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">2.38</font> a share, which was the closing price of the common stock at the date of grant being approved. The Company determined the fair value of the stock option granted using the Black Scholes model and expenses this value monthly based upon the vesting schedule of the stock option award. For purposes of determining fair value, the Company used an average annual volatility of one hundred seventy eight percent (<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">178</font>%), which was calculated based on the closing price of the Company’s stock over the preceding five years. The risk free rate of interest used in the model was taken from a table of the market rate of interest for U. S. Government Securities for the date of the stock option award and the expected term.<font style="FONT-FAMILY:Times New Roman, Times, Serif"> The Company used the simplified method to determine the expected term of the options due to the lack of historical data.</font> The total fair value of the stock option granted was determined using this methodology to be $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">57,425</font>, which is being expensed following the date of grant based on the stock option vesting schedule.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In April of 2014, the Company made two stock option grants each to purchase <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 25,000</font> shares of the Company’s common stock to two new Company employees. Terms of the stock option grants require, among other things, that the individuals continues to provide services over the vesting period of the option, which is four years from the date of grant for each employee stock option. The exercise price of the options is $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">2.71</font> a share, which was the closing price of the common stock at the date of the grant being approved. The Company determined the fair value of the stock option granted using the Black Scholes model and expenses this value monthly based upon the vesting schedule of the stock option award. For purposes of determining fair value, the Company used an average annual volatility of one hundred seventy eight percent (<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">178</font>%), which was calculated based on the closing price of the Company’s stock over the preceding five years. The risk free rate of interest used in the model was taken from a table of the market rate of interest for U. S. Government Securities for the date of the stock option award and the expected term.<font style="FONT-FAMILY:Times New Roman, Times, Serif"> The Company used the simplified method to determine the expected term of the options due to the lack of historical data.</font> The total fair value for both of the stock options granted taken together was determined using this methodology to be $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">133,200</font>, which is being expensed following the date of grant based on the stock option vesting schedule.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In May of 2014, the Company made a stock option grant to purchase <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 25,000</font> shares of the Company’s common stock to a new Company employee. Terms of the stock option grant require, among other things, that the individual continues to provide services over the vesting period of the option, which is four years from the date of grant for each employee stock option. The exercise price of the options is $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">2.40</font> a share, which was the closing price of the common stock at the date of grant being approved. The Company determined the fair value of the stock option granted using the Black Scholes model and expenses this value monthly based upon the vesting schedule of the stock option award. For purposes of determining fair value, the Company used an average annual volatility of one hundred seventy eight percent (<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">178</font>%), which was calculated based on the closing price of the Company’s stock over the preceding five years. The risk free rate of interest used in the model was taken from a table of the market rate of interest for U. S. Government Securities for the date of the stock option award and the expected term.<font style="FONT-FAMILY:Times New Roman, Times, Serif"> The Company used the simplified method to determine the expected term of the options due to the lack of historical data.</font> The total fair value of the stock option granted was determined using this methodology to be $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">58,975</font>, which is being expensed following the date of grant based on the stock option vesting schedule.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;CLEAR: both">  </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In May of 2014, the Company made a stock option grant to purchase <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 125,000</font> shares of the Company’s common stock to a newly hired officer of the Company. Terms of the stock option grant require, among other things, that the individual continues to provide services over the vesting period of the option, which is four years from the date of grant for each employee stock option. The exercise price of the options is $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">2.40</font> a share, which was the closing price of the common stock at the date of grant being approved. The Company determined the fair value of the stock option granted using the Black Scholes model and expenses this value monthly based upon the vesting schedule of the stock option award. For purposes of determining fair value, the Company used an average annual volatility of one hundred seventy eight percent (<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">178</font>%), which was calculated based on the closing price of the Company’s stock over the preceding five years. The risk free rate of interest used in the model was taken from a table of the market rate of interest for U. S. Government Securities for the date of the stock option award and the expected term.<font style="FONT-FAMILY:Times New Roman, Times, Serif"> The Company used the simplified method to determine the expected term of the options due to the lack of historical data.</font> The total fair value of the stock option granted was determined using this methodology to be $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">294,500</font>, which is being expensed following the date of grant based on the stock option vesting schedule.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">Stock option expense for the quarter ending June 30, 2014 was $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">122,793</font>. Of this amount, $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">20,410</font> related to stock options for personnel involved in R&D activities and $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">102,383</font> related to stock options for outside directors, officers and management of the Company.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"><b><i>Warrants</i></b> <i>-</i>There were no warrants for services granted during the quarter ending June 30<font style="FONT-FAMILY:Times New Roman, Times, Serif">, 2014. The warrants issued in connection with the sale of units of common stock were for cash value received and as such were not grants of compensation-based warrants.</font></div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table>
<div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <table style="MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0" width="100%"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 0.25in"> <div><b>9.</b></div> </td> <td style="TEXT-ALIGN: justify"> <div><b>Commitments and Contingencies</b></div> </td> </tr> </table> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"><b><i>Technology License – Related Party -</i></b> The Company has negotiated exclusive licenses from the MD Anderson Cancer Center to develop drug delivery technology for antisense and siRNA drug products. These licenses require, among other things, the Company to reimburse MD Anderson for ongoing patent expense. Related party accrued license payments attributable to the License Agreement totaling $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">50,000</font> are included in Current Liabilities as of June 30, 2014. Related party accrued expense totaling $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">52,050</font> as of June 30, 2014 represents hospital costs for the clinical trial and are not related to the License Agreement. As of June 30, 2014, the Company estimates reimbursable past patent expenses will total approximately $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">75,000</font> for the License Agreement. The Company will be required to pay when invoiced the past patent expenses at the rate of $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">25,000</font> per quarter. In addition, the Company decided to discontinue development of its siRNA technology and subsequently canceled its siRNA license in June of 2012 (See Note 1).</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"><b><i>Drug Supplier Project Plan</i></b> – Bio-Path entered into two project plan agreements with the Company’s drug substance manufacturer and its final drug product manufacturer for the manufacture and delivery of final drug product for expected manufacture in the third quarter of 2014. The project plans required the Company to pay approximately $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">370,000</font> in various stages as the drug substance and final product are manufactured and delivered to the Company. Of this amount, $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">141,345</font> has been paid for by the Company, which was carried on the Balance Sheet as Prepaid Drug Product for Testing as of June 30, 2014. The drug product is anticipated to be delivered to the Company in the fourth quarter of 2014 and the Balance Sheet item Prepaid Drug Product for Testing totaling $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">141,345</font> will be expensed when received.</div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table>
<div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <table style="MARGIN-TOP: 0px; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0px; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0"> <tr style="TEXT-ALIGN: justify; VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: left; WIDTH: 0.25in"> <div><b><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> </font>11.</b></div> </td> <td style="TEXT-ALIGN: justify"> <div><b>Subsequent Events</b></div> </td> </tr> </table> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">At the end of July 2014, the Company’s lease on previous office space expired and the Company did not renew the lease. Previous to this, the Company entered into a lease for a larger office space, which it occupied as of August 2014.</div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table>
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210755
<div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <table style="MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0" width="100%"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 0.25in"> <div><b>2.</b></div> </td> <td> <div><b>Related Party</b></div> </td> </tr> </table> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal"> <b> </b></div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">Based on its stock ownership in the Company, MD Anderson Cancer Center meets the criteria to be deemed a related party of Bio-Path Holdings. For the quarters ending June 30, 2014 and 2013, MD Anderson related party research and development expense was $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">3,213</font> and $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">32,067</font>, respectively. MD Anderson related party research and development expense for the quarter ending June 30, 2014 was comprised of $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">3,213</font> in current patent maintenance fees for the License Agreement. Accounts payable related party was $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">3,213</font> comprised of current patent expenses for the License Agreement, accrued expense related party for MD Anderson was $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">52,050</font> for clinical trial hospital costs for the clinical trial and accrued license payments related party of $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">50,000</font> for past patent expenses (See Notes 4., 5. and 6.). MD Anderson related party research and development expense for the quarter ending June 30, 2013 was comprised of $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">22,050</font> for MD Anderson clinical trial hospital expense and $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">10,017</font> for current patent expenses for the Technology License. As of December 31, 2013, accrued expense related party consisted of $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">52,050</font> for MD Anderson clinical trial hospital costs and $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">100,000</font> in accrued license payments payable due to the related party for past patent expenses and for the annual license maintenance fee for the License Agreement. See Notes 5 and 6.</div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table>
<div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <table style="MARGIN-TOP: 0px; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0px; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0"> <tr style="TEXT-ALIGN: justify; VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: left; WIDTH: 0.25in"> <div><b>3.</b></div> </td> <td style="TEXT-ALIGN: justify"> <div><b>Prepaid Drug Product for Testing</b></div> </td> </tr> </table> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">Advance payments, including nonrefundable amounts, for goods or services that will be used or rendered for future R&D activities are deferred and capitalized. Such amounts will be recognized as an expense as the related goods are delivered or the related services are performed. The Company incurred installments to its contract drug manufacturing and raw material suppliers totaling $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">51,364</font> in late 2013 pursuant to a Drug Supply Contract (See Note 9.) for the manufacture and delivery of the Company’s lead drug product for testing in a Phase I clinical trial. This amount was carried on the Balance Sheet as of December 31, 2013 at cost as Prepaid Drug Product for Testing. The Company incurred additional installment costs with the total costs incurred totaling $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">141,345</font> being carried on the Balance Sheet as of June 30, 2014 as Prepaid Drug Product for Testing (See Note 9.).</div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table>
1.50
1.50
4.74
1.50
1.50
1.50
10-Q
false
2014-06-30
2014
Q2
BIO-PATH HOLDINGS INC
0001133818
--12-31
Smaller Reporting Company
BPTH
89237872
10017
<div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <table style="MARGIN-TOP: 0px; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0px; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0"> <tr style="TEXT-ALIGN: justify; VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: left; WIDTH: 0.25in"> <div><b>10.</b></div> </td> <td style="TEXT-ALIGN: justify"> <div><b>New Accounting Pronouncements</b></div> </td> </tr> </table> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal">  </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date.  If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s consolidated financial statements upon adoption.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal">  </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">Recently, the FASB issued ASU 2014-10 to eliminate the concept of a development stage entity (DSE) from U.S. GAAP.  This change rescinds certain financial reporting requirements that have historically applied to DSEs.  The amendments are effective for annual reporting periods beginning after December 15, 2014 and interim periods therein.  Early adoption is permitted for financial statements that have not yet been issued or made available for issuance.  The Company expects to early adopt ASU 2014-10 as of December 31, 2014.  The Company is currently assessing the impact on the consolidated financial statements.</div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table>
<div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal"> </div> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font> <table style="MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0" width="100%"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 0px"> <div style="CLEAR:both;CLEAR: both"></div> </td> <td style="WIDTH: 0.25in"> <div style="CLEAR:both;CLEAR: both"><b>1.</b></div> </td> <td> <div style="CLEAR:both;CLEAR: both"><b>Organization and Business</b></div> </td> </tr> </table> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">Bio-Path is a development stage company with its lead cancer drug candidate, Liposomal Grb-2 (“L-Grb-2” or “BP-100-1.01”), currently in clinical trials. The Company was founded with technology from The University of Texas, MD Anderson Cancer Center (“MD Anderson”) and is dedicated to developing novel cancer drugs under an exclusive license arrangement (the “License Agreement”). The Company has drug delivery platform technology with composition of matter intellectual property for systemic delivery of antisense. Bio-Path also plans to investigate developing liposome tumor targeting technology, which has the potential to be developed to augment the Company’s current delivery technology to improve further the effectiveness of its antisense. In addition to its existing technology under license the Company expects to maintain a close working relationship with key members of the MD Anderson staff, which has the potential to provide Bio-Path with additional drug candidates in the future. Bio-Path also expects to broaden its technology to include cancer drugs other than antisense, including drug candidates licensed from institutions other than MD Anderson.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">Bio-Path believes that its core technology, if successful, will enable it to be at the center of emerging genetic and molecular target-based therapeutics that require systemic delivery of DNA and RNA-like material. The Company’s two lead liposomal antisense drug candidates are targeted to treat acute myeloid leukemia, myelodysplastic syndrome, chronic myelogenous leukemia, acute lymphoblastic leukemia and follicular lymphoma, and if successful, could potentially be used in treating many other indications of cancer. For example, in July of 2013 Bio-Path announced that it was initiating development of its lead cancer drug Liposomal Grb-2 to treat triple negative breast cancer (TNBC) and inflammatory breast cancer (IBC), two cancers characterized by formation of aggressive tumors and relatively high mortality rates.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">Bio-Path is currently treating patients with its lead cancer drug candidate Liposomal Grb-2 in a Phase I clinical trial. In March of 2010, Bio-Path received written notification from the U.S. Food and Drug Administration (the “FDA”) that its application for Investigational New Drug (“IND”) status for L-Grb-2 had been granted. This enabled the Company to commence its Phase I clinical trial to study L-Grb-2 in human patients, which began in the third quarter 2010.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">The Phase I clinical trial is a dose-escalating study to determine the safety and tolerance of escalating doses of L-Grb-2. The study will also determine the optimal biologically active dose for further development. The pharmacokinetics of L-Grb-2 in patients will be studied, making it possible to investigate whether the delivery technology performs as expected based on pre-clinical studies in animals. In addition, patient blood samples from the trial are now being tested using a new assay developed by the Company to measure down-regulation of the target protein, the critical scientific data needed to demonstrate that the delivery technology does in fact successfully deliver the antisense drug substance to the cell and across the cell membrane into the interior of the cell where expression of the target protein is blocked. The clinical trial is being conducted at The University of Texas MD Anderson Cancer Center.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal">  </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">The original IND granted by the FDA in March of 2010 allowed the Company to proceed with a Phase I clinical trial having five (5) cohorts culminating in a maximum dose of 50 mg/m<sup style="font-style:normal">2</sup>. However, in November of 2012, the Company announced that since there had been no evidence of significant toxicity from treatment of patients with L-Grb-2, the Company requested the FDA to allow higher dosing in patients. The Principal Investigator for the clinical trial, in consultation with Bio-Path’s Board of Directors (the “Board”), advised that with the absence of any real toxicity barriers, the Company should continue to evaluate higher doses of Liposomal Grb-2. The absence of significant toxicity provides a significant opportunity for the Company to test higher doses in patients in order to find a dose that provides maximum potential benefit and duration of anti-leukemia effect. These actions were approved and a revised protocol is in place allowing higher dosing. The Company announced in June of 2013 that it completed Cohort 5, successfully treating three patients at a dose of 60 mg/m<sup style="font-style:normal">2</sup>, which had been increased from 50 mg/m<sup style="font-style:normal">2</sup> in the revised protocol. The Company has enrolled patients in Cohort 6 for treatment at a dose of 90 mg/m<sup style="font-style:normal">2</sup>, has two (2) evaluable patients and is currently treating another patient. Assuming the current patient successfully completes the treatment cycle the Company will be able to close Cohort 6.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">Patients eligible for enrollment into the Phase I clinical trial have refractory or relapsed Acute Myeloid Leukemia (“AML”), Philadelphia Chromosome Positive Chronic Myelogenous Leukemia (“CML”) and Acute Lymphoblastic Leukemia (“ALL”), or Myelodysplastic Syndrome (“MDS”) and who have failed other approved treatments. These are patients with very advanced stages of the disease, and consequently, not all patients enrolled are able to complete the four-week treatment cycle because of progressive disease, which is unrelated to the treatment with Liposomal-Grb-2.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">An important outcome for the Phase I clinical trial is the ability to assess for the first time the performance of the Company’s delivery technology platform in human patients. The Company has developed two new assays to be able to provide scientific proof of concept of the delivery technology. The first involves a novel detection method for the drug substance in blood samples that will be used to assess the pharmacokinetics of the drug. The second involves a method to measure down-regulation of the target protein in a patient blood sample that was achieved. The latter measurement will provide critical proof that the neutral liposome delivery technology delivered the drug substance to the cell and was able to transport it across the cell membrane into the interior to block cellular production of the Grb-2 protein.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In this regard, in August of 2013 Bio-Path made a major announcement that its liposomal delivery technology achieved a major milestone in the development of antisense therapeutics based on a scientific assay confirming that treating patients with its drug candidate BP-100-1.01 inhibits the Grb-2 disease-causing target protein in patients with blood cancers. Inhibition of the disease-causing protein has the effect of down regulating the disease. This will allow for Liposomal Grb-2 to be used potentially in combination with current frontline treatments. This discovery also points to the potential use of a liposomal antisense treatment as a standalone treatment to transform and manage a disease, which has a disease causing protein, as a chronic disorder. This accomplishment is potentially a significant breakthrough for antisense therapeutics, whose development, to date, as a class of therapeutics has been severely limited by a lack of a systemic delivery mechanism that can safely distribute the drug throughout the body and get the antisense drug substance across the cell membrane into the interior of the cell. Further, we expect that scientific proof of principal for our delivery technology may lead to licensing and business development opportunities, furthering our business model.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">The Principal Investigator for the Phase I clinical trial, Jorge Cortes, M.D., is a leading expert in the treatment of CML, AML, MDS and ALL. Because the results of the first trial produced unexpected and clinically interesting results in some patients, the Principal Investigator prepared an abstract of the results of the first cohort that was accepted for presentation at the American Society of Hematology annual meeting in December of 2011. Results that demonstrated potential anti-leukemia benefits in treated patients were included in the presentation. Subsequently, in the fall of 2013 the Principal Investigator prepared an abstract of updated information on the results of the clinical trial through Cohort 5, which was accepted for presentation at the American Society of Hematology annual meeting in December of 2013. Highlights from the presentation prepared by Dr. Cortes for the meeting included:</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal">  </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"><i>Data from the Phase I clinical trial</i></div> <table style="MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0" width="100%"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 1in"> <div style="CLEAR:both;CLEAR: both"></div> </td> <td style="WIDTH: 0.25in"> <div style="CLEAR:both;CLEAR: both">-</div> </td> <td> <div style="CLEAR:both;CLEAR: both">Among 18 evaluable patients, nine experienced at least a 50 percent reduction in peripheral or bone marrow blasts from baseline.</div> </td> </tr> </table> <table style="MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0" width="100%"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 1in"> <div style="CLEAR:both;CLEAR: both"></div> </td> <td style="WIDTH: 0.25in"> <div style="CLEAR:both;CLEAR: both">-</div> </td> <td> <div style="CLEAR:both;CLEAR: both">Five patients demonstrated transient improvement and/or stable disease, three of whom received a total of five cycles each.</div> </td> </tr> </table> <table style="MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0" width="100%"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 1in"> <div style="CLEAR:both;CLEAR: both"></div> </td> <td style="WIDTH: 0.25in"> <div style="CLEAR:both;CLEAR: both">-</div> </td> <td> <div style="CLEAR:both;CLEAR: both">Two patients, in addition to achieving marked blast percentage declines, also experienced transient improvement in leukemia cutis lesions.</div> </td> </tr> </table> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px 0pt 0.5in; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal">  </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px 0pt 0.5in; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal"> <i>Disease Stabilization in MDS and AML</i></div> <table style="MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0" width="100%"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 1in"> <div style="CLEAR:both;CLEAR: both"></div> </td> <td style="WIDTH: 0.25in"> <div style="CLEAR:both;CLEAR: both">-</div> </td> <td> <div style="CLEAR:both;CLEAR: both">Two patients with MDS, a 53-year old male and a 72-year old female, both achieved disease stabilization and continued therapy for five cycles before disease progression.</div> </td> </tr> </table> <table style="MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0" width="100%"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 1in"> <div style="CLEAR:both;CLEAR: both"></div> </td> <td style="WIDTH: 0.25in"> <div style="CLEAR:both;CLEAR: both">-</div> </td> <td> <div style="CLEAR:both;CLEAR: both">A 54-year old HIV positive male with AML achieved stable disease and marked reduction in peripheral blasts, continuing therapy for five cycles before disease progression.</div> </td> </tr> </table> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px 0pt 0.5in; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal"> <i> </i></div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px 0pt 0.5in; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal"> <i>Experience in CML-Blast Phase</i></div> <table style="MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0" width="100%"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 1in"> <div style="CLEAR:both;CLEAR: both"></div> </td> <td style="WIDTH: 0.25in"> <div style="CLEAR:both;CLEAR: both">-</div> </td> <td> <div style="CLEAR:both;CLEAR: both">Patient with myeloid blast crisis of CML</div> </td> </tr> </table> <table style="MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0" width="100%"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 1in"> <div style="CLEAR:both;CLEAR: both"></div> </td> <td style="WIDTH: 0.25in"> <div style="CLEAR:both;CLEAR: both">-</div> </td> <td> <div style="CLEAR:both;CLEAR: both">Prior therapies consist of: imatinib, dastinib, nilotinib, DCC-2036, Cytarabine + Fludarabine + Dasatinib + Gemtuzumab, PHA-739358, Clofarabine + Dasatinib</div> </td> </tr> </table> <table style="MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0" width="100%"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 1in"> <div style="CLEAR:both;CLEAR: both"></div> </td> <td style="WIDTH: 0.25in"> <div style="CLEAR:both;CLEAR: both">-</div> </td> <td> <div style="CLEAR:both;CLEAR: both">Upon start of BP-100-1.01 patient showed a significant reduction in blasts from 81 percent to 5 percent but due to leptomeningeal disease progression discontinued therapy before full cycle.</div> </td> </tr> </table> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px 0pt 0.5in; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal">  </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px 0pt 0.5in; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal"> <i>Inhibition of Target Grb-2 Protein</i></div> <table style="MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0" width="100%"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 1in"> <div style="CLEAR:both;CLEAR: both"></div> </td> <td style="WIDTH: 0.25in"> <div style="CLEAR:both;CLEAR: both">-</div> </td> <td> <div style="CLEAR:both;CLEAR: both">Grb-2 levels were compared to baseline prior to treatment.</div> </td> </tr> </table> <table style="MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0" width="100%"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 1in"> <div style="CLEAR:both;CLEAR: both"></div> </td> <td style="WIDTH: 0.25in"> <div style="CLEAR:both;CLEAR: both">-</div> </td> <td> <div style="CLEAR:both;CLEAR: both">On day 15, BP-100-1.01 decreased Grb-2 in five of eight samples tested (average reduction 55 percent)</div> </td> </tr> </table> <table style="MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt; font-size-adjust: none; font-stretch: normal" cellspacing="0" cellpadding="0" width="100%"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 1in"> <div style="CLEAR:both;CLEAR: both"></div> </td> <td style="WIDTH: 0.25in"> <div style="CLEAR:both;CLEAR: both">-</div> </td> <td> <div style="CLEAR:both;CLEAR: both">End of treatment day15, BP-100-1.01 decreased Grb-2 levels in eight out of nine patients (average reduction 45 percent).</div> </td> </tr> </table> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">Being platform technology, a successful demonstration of the delivery technology in this study will allow the Company to begin expanding Bio-Path’s drug candidates by simply applying the delivery technology template to multiple new drug product targets. In this manner, Bio-Path can quickly build an attractive drug product pipeline with multiple drug product candidates for treating cancer as well as treating other important diseases including diabetes, cardiovascular conditions and neuromuscular disorders. Currently, the Company is researching potential targets for which it can apply its liposomal antisense drug delivery technology and has already identified one new candidate.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">The Phase I clinical trial is typically ended when a maximum tolerated dose (“MTD”) is encountered. However, due to the lack of toxicity of the drug to date, it is not expected that a MTD will be encountered. As a result, the optimal biological dose will be determined and this dose will be used in the following Phase II clinical trial. The Company plans to evaluate patients at the close of Cohort 6 to evaluate whether the Phase I clinical trial should be ended at that time. It is expected that the down regulation assay will be a factor in the evaluation of whether we have reached optimal inhibition. It is noted, however, that the lack of toxicity is a major advantage for the drug candidate BP-100-1.01 since it allows higher levels of drug to be administered to the patient, increasing the potential therapeutic benefit.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal">  </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">As noted previously, the Company has completed two of the three evaluable patients required to close Cohort 6. Once Cohort 6 is completed the Company and the Principal Investigator will determine whether the optimal biological dose has been reached, which would allow the Phase I trial to be ended. Since there has been no evidence of toxicity to date in the trial and none is expected even at a higher dose in a potential seventh cohort, the trade-off is ending the clinical trial sooner after Cohort 6 or waiting to complete a seventh cohort with a higher dose and potentially even better anti-leukemia benefits in the patient. Plans and evaluation of manufacturing scale-up of the drug substance batch size continued. Scale-up of manufacturing batch size previously produced divergence from desired drug substance product parameters, with some product in the fourth quarter of 2013 not being acceptable for use. The most recent manufacturing scale-up drug substance batch appears to have corrected this and a recent drug batch was released for use in the clinical trial by the manufacturer. Scale-up of manufacturing output of drug substance product and final drug product is critical to meeting the anticipated potential for high volume requirements of Bio-Path’s drug products for patients in multiple diseases. The larger size drug substance and final product batch sizes will also substantially drive down manufacturing cost per drug unit. The recent success on the part of the Company in raising capital should also improve drug supply by providing the financial resources that will enable the Company to commit to multiple drug batches beyond those required to satisfy near-term requirements.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">Bio-Path has also been working with the Principal Investigator to finalize plans for Phase II clinical trials in Liposomal Grb-2. Significantly, these plans include three Phase II trials, one each for CML, AML and MDS, of the drug candidate Liposomal Grb-2 in salvage therapy for very advanced patients.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">At the end of January 2012, the Company’s Board held a strategic planning session. Among several topics was a discussion of the Company’s liposomal siRNA technology. The siRNA discussion covered a broad range of topics including intellectual property, the amount of development that would be needed and the overall impression of diminishing acceptance of siRNA technology by the pharmaceutical industry and equity market investors. The Board compared this to our core liposomal antisense technology, which has a stronger intellectual property position, a method of action blocking expression of disease-causing proteins that is better understood in the scientific community and a much easier path for development than liposomal siRNA technology. Since both antisense and siRNA are means to block expression of disease-causing proteins, the Board concluded that there was no apparent reason to develop a second, higher-risk siRNA method of blocking protein expression when the development of the liposomal antisense method is now much further along and showing promising results. After this discussion the Board decided to discontinue development of the licensed liposomal siRNA technology and the Company commenced discussions regarding this decision with MD Anderson to determine with them whether to modify the license to include other products, postpone the license or simply abandon the license. As an interim step pending final resolution of this matter, the Company took a charge of $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">345,000</font> at the end of the fiscal year ending December 31, 2011 to reduce the carrying value of the siRNA license by fifty percent (<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">50</font>%). This amount represented one half of the value of the common stock given to MD Anderson when the original siRNA license was finalized. In June 2012, the Company decided to write-off the balance of the carrying value of the siRNA license, representing $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">345,000</font>, and cancel the license.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-INDENT: 0.5in; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">The Company was founded in May of 2007 as a Utah corporation. In February of 2008, Bio-Path completed a reverse merger with Ogden Golf Co. Corporation, a public company traded over the counter that had no current operations. The name of Ogden Golf was changed to Bio-Path Holdings, Inc. and the directors and officers of Bio-Path, Inc. became the directors and officers of Bio-Path Holdings, Inc. Bio-Path became a publicly traded company as a result of this merger. The Company’s operations to date have been limited to organizing and staffing the Company, acquiring, developing and securing its technology and undertaking product development for a limited number of product candidates including readying and now conducting a Phase I clinical trial in its lead drug product candidate Liposomal Grb-2.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal">  </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">On November 5, 2013, we filed a shelf registration statement on Form S-3 with the SEC, which was declared effective by the SEC on January 13, 2014. The shelf registration statement was filed to register the offering and sale of up to $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">100</font> million of our common stock, preferred stock, warrants to purchase common stock or preferred stock or any combination thereof, either individually or in units. The foregoing does not constitute an offer to sell or the solicitation of an offer to buy securities, and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of that jurisdiction.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">On January 15, 2014, we entered into a securities purchase agreement, as amended, with two dedicated healthcare funds (collectively, the “Sabby Investors”) that are managed by Sabby Management, pursuant to which the Company agreed to sell an aggregate of <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 5,000,000</font> shares of its common stock and warrants to purchase a total of <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 2,500,000</font> shares of its common stock to the Sabby Investors for gross proceeds of approximately $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">15,000,000</font>. The net proceeds to the Company from the registered direct public offering, after deducting the placement agent’s fees and expenses, the Company’s estimated offering expenses, and excluding the proceeds from the exercise of the warrants issued in the offering, were approximately $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">13.8</font> million. We will use the net proceeds from this offering and sale of securities for working capital and general corporate purposes.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">On March 5, 2014, the NASDAQ Stock Market LLC informed the Company that it had approved the listing of the Company’s common stock on the NASDAQ Capital Market. The Company’s common stock ceased trading on the OTCQX and commenced trading on the NASDAQ Capital Market on March 10, 2014 under the ticker symbol “BPTH.”</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">On March 11, 2014, the Board of the Company appointed Ulrich W. Mueller, Ph.D., as the Company’s Chief Operating Officer. This is the initial hiring step implanting a plan to put in place a core organization that can manage the Company’s expanding clinical trials and deliver on the Bio-Path business plan vision of rapidly converting validated protein disease targets into proprietary liposome-antisense drug candidates that enter Phase I clinical trials. In April 2014, the Company progressed further with its organization plan by hiring a director of clinical trials, controller and director of information technology. Subsequent to the close of the second quarter, 2014, the Company has hired additional personnel to add further to the core organization. The Company anticipates that by the end of the third quarter 2014 it will have added the remaining employees to complete the organization plan.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal">  </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">In April 2014 the Company entered in a lease for a larger office space. The new, expanded size office is required for the core organization the Company is adding.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal">  </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal"> As of June 30, 2014, Bio-Path had $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">15,721,128</font> in cash on hand.</div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal">  </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif; font-size-adjust: none; font-stretch: normal" align="justify">As the Company has not begun its planned principal operations of commercializing a product candidate, the accompanying financial statements have been prepared in accordance with principles established for development stage enterprises.</div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table>
Research and development expense includes stock option expenses of $20,410 and $8,220 for the quarters ending 6/30/2014 and 6/30/2013, respectively; $27,032 and $19,633 for the six month periods ending 6/30/2014 and 6/30/2013, respectively; and $482,912 for the period from inception through 6/30/2014
Includes $690,000 technology impairment charge for the period from inception through 6/30/2014
General & administrative expense includes stock for services, stock option and warrant expenses of $102,383 and $5,318 for the quarters ending 6/30/2014 and 6/30/2013, respectively; $182,039 and $9,923 for the six month periods ending 6/30/2014 and 6/30/2013, respectively; and $3,444,392 for the period from inception through 6/30/2014 for stock options and warrants and $318,500 in stock for services.