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<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Description of Business</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">We are a biopharmaceutical company focused on
the acquisition, development and commercialization of novel treatments for B-cell malignancies and autoimmune diseases. Currently,
we are developing two therapies targeting hematologic malignancies. TG-1101 (ublituximab) is a novel, glycoengineered monoclonal
antibody that targets a specific and unique epitope on the CD20 antigen found on mature B-lymphocytes. We are also developing TGR-1202,
an orally available PI3K delta inhibitor. The delta isoform of PI3K is strongly expressed in cells of hematopoietic origin and
is believed to be important in the proliferation and survival of B-lymphocytes. Both TG-1101 and TGR-1202 are in clinical development
for patients with hematologic malignancies, with TG-1101 also in clinical development for autoimmune disorders. The Company also
has pre-clinical programs to develop IRAK4 (interleukin-1 receptor-associated kinase 4) inhibitors, BET (Bromodomain and Extra
Terminal) inhibitors, and anti-PD-L1 and anti-GITR antibodies.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">We also actively evaluate complementary products,
technologies and companies for in-licensing, partnership, acquisition and/or investment opportunities. To date, we have not received
approval for the sale of any of our drug candidates in any market and, therefore, have not generated any product sales from our
drug candidates.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">The accompanying unaudited condensed consolidated
financial statements were prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial
information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X of the Exchange Act. Accordingly,
they may not include all of the information and footnotes required by GAAP for complete financial statements. All adjustments that
are, in the opinion of management, of a normal recurring nature and are necessary for a fair presentation of the condensed consolidated
financial statements have been included. Nevertheless, these condensed consolidated financial statements should be read in conjunction
with the audited consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31,
2016. The accompanying condensed December 31, 2016 balance sheet has been derived from these statements. The results of operations
for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the entire fiscal
year or any other interim period.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Liquidity and Capital Resources</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">We have incurred operating losses since our inception,
expect to continue to incur operating losses for the foreseeable future, and may never attain profitable operations. As of March
31, 2017, we have an accumulated deficit of approximately $264.1 million.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">Our major sources of cash have been proceeds from
the private placement and public offering of equity securities. We have not yet commercialized any of our drug candidates and cannot
be sure if we will ever be able to do so. Even if we commercialize one or more of our drug candidates, we may not become profitable.
Our ability to achieve profitability depends on many factors, including our ability to obtain regulatory approval for our drug
candidates; successfully completing any post-approval regulatory obligations; and successfully commercializing our drug candidates
alone or with one or more partners. We may continue to incur substantial operating losses even if we begin to generate revenues
from our drug candidates.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">As of March 31, 2017, we had approximately $109.5
million in cash, cash equivalents, investment securities, and interest receivable, which we believe will be sufficient to fund
the Company’s planned operations through 2018. The actual amount of cash that we will need to operate is subject to many
factors, including, but not limited to, the timing, design and conduct of clinical trials for our drug candidates. We are dependent
upon significant future financing to provide the cash necessary to execute our current strategic plan, including the commercialization
of any of our drug candidates.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">Our common stock is listed on the Nasdaq Capital
Market and trades under the symbol “TGTX.”</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Recently Issued Accounting Standards</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In January 2017, the Financial Accounting Standards
Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2017-04, “Simplifying the Test for Goodwill
Impairment” (“ASU 2017-04”). ASU 2017-04 removes the requirement to compare the implied fair value of goodwill
with its carrying amount as part of step 2 of the goodwill impairment test. As a result, under ASU 2017-04, an entity should perform
its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should
recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however,
the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, ASU 2017-04:</p>
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<tr>
<td style="vertical-align: top; width: 72px; padding: 0.75pt; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">Clarifies the requirements for excluding and allocating foreign currency translation adjustments to reporting units in connection with an entity’s testing of reporting units for goodwill impairment.</font></td></tr>
<tr>
<td style="vertical-align: top; font: 12pt Times New Roman, Times, Serif; padding: 0.75pt"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">Clarifies that an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.</font></td></tr>
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<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"></p>
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<tr>
<td style="vertical-align: top; width: 72px; padding: 0.75pt; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">Makes minor changes to the overview and background sections of certain Accounting Standards Codification (“ASC” or “Codification”) subtopics and topics as part of the Board’s initiative to unify and improve those sections throughout the Codification.</font></td></tr>
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<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">ASU 2017-04 is effective prospectively for annual
and interim periods beginning on or after December 15, 2019, and early adoption is permitted on testing dates after January 1,
2017. We are currently evaluating the impact the adoption of ASU 2017-04 will have on our consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Other pronouncements issued by the FASB or other
authoritative accounting standards group with future effective dates are either not applicable or not significant to our consolidated
financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Use of Estimates</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The preparation of financial statements in conformity
with GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the applicable reporting period. Actual results could differ from those estimates. Such differences could be material
to the consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Cash and Cash Equivalents</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 45pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">We treat liquid investments with original maturities
of three months or less when purchased as cash and cash equivalents.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Restricted Cash</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">We record cash pledged or held in trust as restricted
cash. As of March 31, 2017 and December 31, 2016, we have approximately $0.6 million of restricted cash pledged to secure a line
of credit as a security deposit for an <font style="background-color: white">Office Agreement</font> (see Note 8).</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Investment Securities</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">Investment securities at March 31, 2017 and December
31, 2016 consist of short-term government securities. We classify these securities as held-to-maturity. Held-to-maturity securities
are those securities in which we have the ability and intent to hold the security until maturity. Held-to-maturity securities are
recorded at amortized cost, adjusted for the amortization or accretion of premiums or discounts. Premiums and discounts are amortized
or accreted over the life of the related held-to-maturity security as an adjustment to yield using the effective interest method.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">A decline in the market value of any investment
security below cost, that is deemed to be other than temporary, results in a reduction in the carrying amount to fair value. The
impairment is charged to operations and a new cost basis for the security is established. Other-than-temporary impairment charges
would be included in interest and other (income) expense, net. Dividend and interest income are recognized when earned.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Credit Risk</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">Financial instruments that potentially subject
the Company to concentrations of credit risk consist primarily of cash and cash equivalents and short-term investments. The Company
maintains its cash and cash equivalents and short-term investments with high-credit quality financial institutions. At times, such
amounts may exceed federally-insured limits.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Revenue Recognition</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">We recognize license revenue in accordance with
the revenue recognition guidance of the FASB Codification. We analyze each element of our licensing agreement to determine the
appropriate revenue recognition. The terms of the license agreement may include payments to us of non-refundable up-front license
fees, milestone payments if specified objectives are achieved, and/or royalties on product sales. We recognize revenue from upfront
payments over the period of significant involvement under the related agreements unless the fee is in exchange for products delivered
or services rendered that represent the culmination of a separate earnings process and no further performance obligation exists
under the contract. We recognize milestone payments as revenue upon the achievement of specified milestones only if (1) the milestone
payment is non-refundable, (2) substantive effort is involved in achieving the milestone, (3) the amount of the milestone is reasonable
in relation to the effort expended or the risk associated with achievement of the milestone, and (4) the milestone is at risk for
both parties. If any of these conditions are not met, we defer the milestone payment and recognize it as revenue over the estimated
period of performance under the contract.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Research and Development Costs</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 45pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">Generally, research and development costs are
expensed as incurred. Non-refundable advance payments for goods or services that will be used or rendered for future research and
development activities are deferred and amortized over the period that the goods are delivered or the related services are performed,
subject to an assessment of recoverability. We make estimates of costs incurred in relation to external clinical research organizations,
or CROs, and clinical site costs. We analyze the progress of clinical trials, including levels of patient enrollment, invoices
received and contracted costs when evaluating the adequacy of the amount expensed and the related prepaid asset and accrued liability.
Significant judgments and estimates must be made and used in determining the accrued liability balance and expense in any accounting
period. We review and accrue CRO expenses and clinical trial study expenses based on work performed and rely upon estimates of
those costs applicable to the stage of completion of a study. Accrued CRO costs are subject to revisions as such trials progress
to completion. Revisions are charged to expense in the period in which the facts that give rise to the revision become known. With
respect to clinical site costs, the financial terms of these agreements are subject to negotiation and vary from contract to contract.
Payments under these contracts may be uneven, and depend on factors such as the achievement of certain events, the successful recruitment
of patients, the completion of portions of the clinical trial or similar conditions. The objective of our policy is to match the
recording of expenses in our financial statements to the actual services received and efforts expended. As such, expense accruals
related to clinical site costs are recognized based on our estimate of the degree of completion of the event or events specified
in the specific clinical study or trial contract.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.75in">           
        Prepaid research and development in our consolidated balance sheets includes, among other
things, certain costs to third party service providers related to development and manufacturing services as well as clinical development.
These agreements often require payments in advance of services performed or goods received. Accordingly, as of March 31, 2017 and
December 31, 2016, we recorded approximately $8.4 million and $5.7 million, respectively, in prepaid research and development related
to such advance agreements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Income Taxes</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">Income taxes are accounted for under the asset
and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary
differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases,
operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment
date. If the likelihood of realizing the deferred tax assets or liability is less than “more likely than not,” a valuation
allowance is then created.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Stock-Based Compensation</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">We recognize all stock-based payments to employees
and non-employee directors (as compensation for service) as noncash compensation expense in the condensed consolidated financial
statements based on the fair values of such payments. Stock-based compensation expense recognized each period is based on the value
of the portion of stock-based payment awards that is ultimately expected to vest during the period. Forfeitures are estimated at
the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">For stock-based payments to consultants and other
third-parties (including related parties), noncash compensation expense is determined at the “measurement date.” The
expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation
expense remains uncertain. We record compensation expense based on the fair value of the award at the reporting date. The awards
to consultants and other third-parties (including related parties) are then revalued, or the total compensation is recalculated
based on the then current fair value, at each subsequent reporting date.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">In addition, because some of the options, restricted
stock and warrants issued to employees, consultants and other third-parties vest upon achievement of certain milestones, the total
expense is uncertain. Compensation expense for such awards that vest upon the achievement of milestones is recognized when the
achievement of such milestones becomes probable.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Basic and Diluted Net Loss Per Common Share</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">Basic net loss per share of our common stock is
calculated by dividing net loss applicable to the common stock by the weighted average number of our common stock outstanding for
the period. Diluted net loss per share of common stock is the same as basic net loss per share of common stock since potentially
dilutive securities from stock options, stock warrants and convertible preferred stock would have an antidilutive effect either
because we incurred a net loss during the periods presented or because such potentially dilutive securities were out of the money
and the Company realized net income during the periods presented. The amounts of potentially dilutive securities excluded from
the calculation were 3,634,008 and 6,869,500 for the three months ended March 31, 2017 and 2016, respectively. The following outstanding
shares of potentially dilutive securities were excluded from the computation of net loss per share attributable to common stockholders
for the periods presented because including them would have been antidilutive:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 8pt"><b>Three Months Ended March 31,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 8pt"><b>2017</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 8pt"><b>2016</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 78%"><font style="font-size: 8pt">Unvested restricted stock</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 8%; text-align: right"><font style="font-size: 8pt">3,619,016</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 8%; text-align: right"><font style="font-size: 8pt">5,674,415</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Warrants</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,177,137</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Shares issuable upon note conversion </font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 8pt">14,992</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 8pt">17,948</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">3,634,008</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">6,869,500</font></td>
<td> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Long-Lived Assets and Goodwill</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">Long-lived assets are reviewed for potential impairment
when circumstances indicate that the carrying value of long-lived tangible and intangible assets with finite lives may not be recoverable.
Management’s policy in determining whether an impairment indicator exists, a triggering event, comprises measurable operating
performance criteria as well as qualitative measures. If an analysis is necessitated by the occurrence of a triggering event, we
make certain assumptions in determining the impairment amount. If the carrying amount of an asset exceeds its estimated future
cash flows, an impairment charge is recognized.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">Goodwill is reviewed for impairment annually,
or earlier when events arise that could indicate that an impairment exists. We test for goodwill impairment using a two-step process.
The first step compares the fair value of the reporting unit with the unit's carrying value, including goodwill. When the carrying
value of the reporting unit is greater than fair value, the unit’s goodwill may be impaired, and the second step must be
completed to measure the amount of the goodwill impairment charge, if any. In the second step, the implied fair value of the reporting
unit’s goodwill is compared with the carrying amount of the unit’s goodwill. If the carrying amount is greater than
the implied fair value, the carrying value of the goodwill must be written down to its implied fair value. We will continue to
perform impairment tests annually, at December 31, and whenever events or changes in circumstances suggest that the carrying value
of an asset may not be recoverable.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Rent Expense and Deferred Rent</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">Rent expense and lease incentives, including landlord
construction allowances, are recognized on a straight-line basis over the lease term, commencing generally on the date the Company
takes possession of the leased property. The Company records lease incentives as deferred rent and recognizes the lease incentives
as reductions of rental expense. The unamortized portion of deferred rent is included in deferred rent in the condensed consolidated
balance sheets.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">The following tables summarize our cash and cash
equivalents at March 31, 2017 and December 31, 2016:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>March 31, 2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Money market funds</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">15,106,834</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">20,978,947</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Checking and bank deposits</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">80,530,738</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">4,052,333</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">95,637,572</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">25,031,280</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">Our investments as of March 31, 2017 and December
31, 2016 are classified as held-to-maturity. Held-to-maturity investments are recorded at amortized cost.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">The following tables summarize our investment
securities at March 31, 2017 and December 31, 2016:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>March 31, 2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Amortized cost, as adjusted</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Gross unrealized holding gains</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Gross unrealized holding losses</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Estimated fair value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Short-term investments:</font></td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">Obligations of domestic governmental agencies (maturing between April 2017 and September 2017) (held-to-maturity) </font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">13,823,332</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">607</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">5,255</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">13,818,684</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total short-term investment securities</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">13,823,332</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">607</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">5,255</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">13,818,684</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Amortized cost, as adjusted</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Gross unrealized holding gains</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Gross unrealized holding losses</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Estimated fair value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Short-term investments:</font></td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">Obligations of domestic governmental agencies (maturing between February 2017 and September 2017) (held-to-maturity) </font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">19,853,860</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">3,270</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2,492</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">19,854,638</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total short-term investment securities</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">19,853,860</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">3,270</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">2,492</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">19,854,638</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">We measure certain financial assets and liabilities
at fair value on a recurring basis in the condensed consolidated financial statements. The fair value hierarchy ranks the quality
and reliability of inputs, or assumptions, used in the determination of fair value and requires financial assets and liabilities
carried at fair value to be classified and disclosed in one of the following three categories:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr>
<td style="vertical-align: top; width: 2%; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 8pt">●</font></td>
<td style="width: 98%; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">Level 1 – quoted prices in active markets for identical assets and liabilities;</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"></p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr>
<td style="vertical-align: top; width: 2%; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 8pt">●</font></td>
<td style="width: 98%; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">Level 2 – inputs other than Level 1 quoted prices that are directly or indirectly observable; and</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"></p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr>
<td style="vertical-align: top; width: 2%; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 8pt">●</font></td>
<td style="width: 98%; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">Level 3 – unobservable inputs that are not corroborated by market data.</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As of March 31, 2017 and December 31, 2016, the
fair values of cash and cash equivalents, restricted cash, and notes and interest payable, approximate their carrying value.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="background-color: white">At the
time of our merger (we were then known as Manhattan Pharmaceuticals, Inc.) with Ariston Pharmaceuticals, Inc. (“Ariston”)
in March 2010, Ariston issued $15.5 million of five-year 5% notes payable (the “5% Notes”) in satisfaction of several
note payable issuances. The 5% Notes and accrued and unpaid interest thereon are convertible at the option of the holder into common
stock at the conversion price of $1,125 per share. Ariston agreed to make quarterly payments on the 5% Notes equal to 50% of the
net product cash flow received from the exploitation or commercialization of Ariston’s product candidates, AST-726 and AST-915.
We have no obligations under the 5% Notes aside from (a) 50% of the net product cash flows from Ariston’s product candidates,
if any, payable to noteholders; and (b) the conversion feature, discussed above.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="background-color: white">The cumulative
liability to the Ariston subsidiary including accrued and unpaid interest of the 5% Notes was approximately $16.9 million at March
31, 2017 and $16.7 million at December 31, 2016.</font> No payments have been made on the 5% Notes as of March 31, 2017.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In December 2011, we elected the fair value option
for valuing the 5% Notes. The fair value option was elected in order to reflect in our financial statements the assumptions that
market participants use in evaluating these financial instruments.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As of December 31, 2013, as a result of expiring
intellectual property rights and other factors, it was determined that net product cash flows from AST-726 were unlikely. As we
have no other obligations under the 5% Notes aside from the net product cash flows and the conversion feature, the conversion feature
was used to estimate the 5% Notes’ fair value as of March 31, 2017 and December 31, 2016. The assumptions, assessments and
projections of future revenues are subject to uncertainties, difficult to predict, and require significant judgment. The use of
different assumptions, applying different judgment to inherently subjective matters and changes in future market conditions could
result in significantly different estimates of fair value and the differences could be material to our condensed consolidated financial
statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following tables provide the fair value measurements
of applicable financial liabilities as of March 31, 2017 and December 31, 2016:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Financial liabilities at fair value as of March 31, 2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 1</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 2</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 3</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">5% Notes</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">174,657</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">174,657</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">174,657</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">174,657</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Financial liabilities at fair value as of December 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 1</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 2</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 3</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">5% Notes</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The Level 3 amounts above represent the fair
value of the 5% Notes and related accrued interest.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table summarizes the changes in
Level 3 instruments during the three months ended March 31, 2017:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="width: 88%"><font style="font-size: 8pt">Fair value at December 31, 2016</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Interest accrued on face value of 5% Notes</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">202,748</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Change in fair value of Level 3 liabilities</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(96,966</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Fair value at March 31, 2017</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">174,657</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The change in the fair value of the Level 3 liabilities
is reported in other (income) expense in the accompanying condensed consolidated statements of operations.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Preferred Stock</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our amended and restated certificate of incorporation
authorizes the issuance of up to 10,000,000 shares of preferred stock, $0.001 par value, with rights senior to those of our common
stock, <font style="background-color: white">issuable in one or more series. Upon issuance, we can determine the rights, preferences,
privileges and restrictions thereof. These rights, preferences and privileges could include dividend rights, conversion rights,
voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting any series
or the designation of such series, any or all of which may be greater than the rights of common stock.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Common Stock</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our amended and restated certificate of incorporation
authorizes the issuance of up to 150,000,000 shares of $0.001 par value common stock.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="background-color: white">In December
2014, we filed a shelf registration statement on Form S-3 (the "2015 S-3"), which was declared effective in January 2015.
Under the 2015 S-3, the Company may sell up to a total of $250 million of its securities. In connection with the 2015 S-3, we amended
our 2013 At-the-Market Issuance Sales Agreement with MLV & Co. LLC (the "2015 ATM") such that we may issue and sell
additional shares of our common stock, having an aggregate offering price of up to $175.0 million, from time to time through MLV
& Co. LLC ("MLV") and FBR Capital Markets & Co. ("FBR", each of MLV and FBR individually an "Agent"
and collectively the "Agents"), acting as the sales agents. Under the 2015 ATM we pay the Agents a commission rate of up
to 3.0% of the gross proceeds from the sale of any shares of common stock sold through the Agents.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="background-color: white">During
the three months ended March 31, 2017, we sold a total of 3,104,253 shares of common stock under the 2015 ATM for total gross proceeds
of approximately $31.6 million at an average selling price of $10.18 per share, resulting in net proceeds of approximately $31.0
million after deducting commissions and other transaction costs.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="background-color: white">On March
9, 2017, we announced the pricing of an underwritten public offering of 5,128,206 shares of our common stock (plus a 30-day underwriter
option to purchase up to an additional 769,230 shares of common stock, which was exercised) at a price of $9.75 per share.
Net proceeds from this offering, including the overallotment, were approximately $54 million, net of underwriting discounts and
offering expenses of approximately $3.5 million. The offering closed on March 14, 2017.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="background-color: white">The 2015
S-3 is currently our only active shelf registration statement. After deducting shares already sold, including under the 2015 ATM,
there is approximately $88.2 million of common stock that remains available for sale under the 2015 S-3. We may offer the securities
under the 2015 S-3 from time to time in response to market conditions or other circumstances if we believe such a plan of financing
is in the best interests of our stockholders. We believe that the 2015 S-3 provides us with the flexibility to raise additional
capital to finance our operations as needed.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Equity Incentive Plans</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The TG Therapeutics, Inc. Amended and Restated
2012 Incentive Plan (“2012 Incentive Plan”) was approved by stockholders in June 2015. As of March 31, 2017, no options
were outstanding and up to an additional 2,180,005 shares may be issued under the 2012 Incentive Plan.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Effective as of January 1, 2017, we entered into
an amendment (the “Amendment”) to the employment agreement entered as of December 15, 2011 (together with the Amendment,
the “Employment Agreement”) with Michael S. Weiss, our Executive Chairman and interim Chief Executive Officer and President
of the Company. Under the Amendment, Mr. Weiss will remain as Chief Executive Officer and President, removing the interim status.
Simultaneously, we entered into a Strategic Advisory Agreement (the “Advisory Agreement”) with Caribe BioAdvisors,
LLC (the “Advisor”) owned by Mr. Weiss to provide the services of Mr. Weiss as Chairman of the Board and as Executive
Chairman. As part of the Amendment, Mr. Weiss also agreed to forfeit 3,381,866 restricted shares previously granted under the Employment
Agreement that were predominantly subject to time-based vesting over the next three years. Simultaneously, (i) Mr. Weiss was issued
418,371 restricted shares under the Employment Agreement that vest in 2018 and 2019 and (ii) the Advisor was issued 2,960,000 restricted
shares under the Advisory Agreement that vest on market capitalization thresholds ranging from $375 million to $750 million. Collectively,
Mr. Weiss and the Advisor were granted fewer shares than Mr. Weiss forfeited. In accordance with GAAP, there was no incremental stock compensation expense recognition as a result of the
modification.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><u>Restricted Stock</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Certain employees, directors and consultants
have been awarded restricted stock. The restricted stock vesting consists of milestone and time-based vesting. The following table
summarizes restricted share activity for the three months ended March 31, 2017:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Number of Shares</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted Average Grant Date Fair Value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Outstanding at December 31, 2016</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">8,642,055</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">7.20</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">111,254</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">4.80</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Vested</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(3,629,798</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">5.10</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Forfeited</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(4,495</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">4.65</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at March 31, 2017</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">5,119,016</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">6.21</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Total expense associated with restricted stock
grants was approximately $6.0 million and $1.7 million during the three months ended March 31, 2017 and 2016, respectively. As
of March 31, 2017, there was approximately $9.6 million of total unrecognized compensation cost related to unvested time-based
restricted stock, which is expected to be recognized over a weighted average period of 1.4 years. This amount does not include,
as of March 31, 2017, 305,000 shares of restricted stock outstanding which are milestone-based and vest upon certain corporate
milestones; and 2,397,583 shares of restricted stock outstanding issued to non-employees, the expense for which is determined each
reporting period at the measurement date. The expense is recognized over the vesting period of the award. Until the measurement
date is reached for milestone awards, the total amount of compensation expense remains uncertain. We record compensation expense
based on the fair value of the award at the reporting date.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><u>Warrants</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table summarizes warrant activity
for the three months ended March 31, 2017:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Warrants</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted average exercise price</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Aggregate Intrinsic Value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 64%"><font style="font-size: 8pt">Outstanding at December 31, 2016</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 9%; padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">913,381</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">2.41</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">1,961,403</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Issued</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(887,585</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2.41</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expired</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(25,796</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td> </td>
<td style="text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at March 31, 2017</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Stock-Based Compensation</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">We did not grant any stock options during the
three months ended March 31, 2017 and 2016.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">The following table summarizes stock-based compensation
expense information about restricted stock and stock options for the three months ended March 31, 2017 and 2016:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="6" style="text-align: center"><font style="font-size: 8pt"><b>Three months ended March 31,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Stock-based compensation expense associated with restricted stock</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">5,995,455</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,698,965</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">5,995,455</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">1,698,965</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0">The following is a summary of notes payable:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"> <b>March 31, 2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Non-current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Non-current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 40%"><font style="font-size: 8pt">Convertible 5% Notes Payable</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">174,657</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">174,657</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">174,657</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">174,657</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Convertible 5% Notes Payable</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">The 5% Notes and accrued and unpaid interest thereon
are convertible at the option of the holder into common stock at the conversion price of $1,125 per share. <font style="background-color: white">We
have no obligation under the 5% Notes aside from (a) 50% of the net product cash flows from Ariston’s product candidates,
if any, payable to noteholders; and (b) the conversion feature, discussed above.</font> Interest accrues monthly, is added to principal
on an annual basis, every March 8, and is payable at maturity, which was March 8, 2015 (see Note 4 for further details).</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt"><font style="background-color: white">The cumulative
liability including accrued and unpaid interest of these notes was approximately $16.9 million at March 31, 2017 and $16.7 million
at December 31, 2016.</font> No payments have been made on the 5% Notes as of March 31, 2017.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">In December 2011, we elected the fair value option
for valuing the 5% Notes. The fair value option was elected in order to reflect in our financial statements the assumptions that
market participants use in evaluating these financial instruments (see Note 4 for further details).</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>BET</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">In May 2016, as part of a broader agreement with
Jubilant Biosys (“Jubilant”), an India-based biotechnology company, we entered into a sub-license agreement (“JBET
Agreement”) with Checkpoint Therapeutics, Inc. (“Checkpoint”), (see Note 8), for the development and commercialization
of Jubilant’s novel BET inhibitor program in the field of hematological malignancies.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">Under the terms of the agreement, we paid Checkpoint
an up-front licensing fee of $1.0 million and will make additional payments contingent on certain preclinical, clinical, and regulatory
milestones, including commercial milestones totaling up to approximately $177 million and a single-digit royalty on net sales.
TG will also provide funding to support certain targeted research efforts at Jubilant.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>TG-1101</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">In November 2012, we entered into an exclusive
(within the territory) sublicense agreement with Ildong relating to the development and commercialization of TG-1101 in South Korea
and Southeast Asia. Under the terms of the sublicense agreement, Ildong has been granted a royalty bearing, exclusive right, including
the right to grant sublicenses, to develop and commercialize TG-1101 in South Korea, Taiwan, Singapore, Indonesia, Malaysia, Thailand,
Philippines, Vietnam, and Myanmar.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">An upfront payment of $2.0 million which was received
in December 2012 <font style="background-color: white">(net of $0.3 million of income tax withholdings</font>), is recognized as
license revenue on a straight-line basis over the life of the agreement, which is through the expiration of the last licensed patent
right or 15 years after the first commercial sale of a product in such country, unless the agreement is earlier terminated, and
represents the estimated period over which we will have certain ongoing responsibilities under the sublicense agreement. We recorded
license revenue of approximately $38,000 for each of the three months ended March 31, 2017 and 2016, and, at March 31, 2017 and
December 31, 2016, have deferred revenue of approximately $1.3 million and $1.4 million, respectively, associated with this $2.0
million payment (approximately $0.2 million of which has been classified in current liabilities at March 31, 2017 and December
31, 2016).</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>LFB Biotechnologies</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">On January 30, 2012, we entered into an exclusive
license agreement with LFB Biotechnologies, GTC Biotherapeutics and LFB/GTC LLC, all wholly-owned subsidiaries of LFB Group, relating
to the development of ublituximab (the “LFB License Agreement”). In connection with the LFB License Agreement, LFB
Group was issued 5,000,000 shares of common stock, and a warrant to purchase 2,500,000 shares of common stock at a purchase price
of $0.001 per share. In addition, on November 9, 2012, we nominated Dr. Yann Echelard to our Board of Directors as LFB Group’s
nominee. LFB Group maintains the right to nominate a board member until such time as LFB Group owns less than 10% of the outstanding
common stock.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">Under the terms of the LFB License Agreement,
we utilize LFB Group for certain development and manufacturing services. We incurred expenses of approximately $27,000 and no such
expenses during the three months ended March 31, 2017 and 2016, respectively, which have been included in other research and development
expenses in the accompanying condensed consolidated statements of operations. As of March 31, 2017 and December 31, 2016, we had
approximately $17,000 and $0.4 million, respectively, recorded in accounts payable related to the LFB License Agreement. In conjunction
with the development and manufacturing services discussed above, certain agreements between us and LFB Group require payments in
advance of services performed or goods delivered. Accordingly, as of March 31, 2017 and December 31, 2016, we recorded approximately
$1.6 million and $1.3 million, respectively, in prepaid research and development for such advance payments.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Other Parties</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">In March 2014, we entered into a shared services
agreement (the “Opus Shared Services Agreement”) with Opus Point Partners Management, LLC (“Opus”) in which
the parties agreed to share the costs of a rented facility and certain other services. Our Executive Chairman and Interim Chief
Executive Officer is a Managing Member of Opus. During the three months ended March 31, 2017 and 2016, we incurred expenses of
approximately $0 and $0.1 million, respectively, principally for rent, related to this agreement. The Opus Shared Services Agreement
is no longer in effect as we began occupying new space in April 2016.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt"><font style="background-color: white">In October
2014, we entered into an agreement (the “Office Agreement”) with Fortress Biotech, Inc. (“Fortress”), to
occupy approximately 45% of the 24,000 square feet of New York City office space leased by Fortress, which is now our corporate
headquarters. The Office Agreement requires us to pay our respective share of the average annual rent and other costs of the 15-year
lease. We approximate an average annual rental obligation of $1.1 million under the Office Agreement. We began to occupy this new
space in April 2016, with rental payments beginning in the third quarter of 2016. During the three months ended March 31, 2017,
we recorded rent expense of approximately $0.4 million and</font> at March 31, 2017, have deferred rent of approximately $1.3 million<font style="background-color: white">.
Mr. Weiss, our Executive Chairman and Interim CEO, is also Executive Vice Chairman of Fortress.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Under the Office Agreement, <font style="background-color: white">we
agreed to pay Fortress our portion of the build out costs,</font> which have been allocated to us at the 45% rate mentioned above.
The allocated build-out costs have been recorded in Leasehold Interest and will be amortized over the 15-year term of the Office
Agreement. After an initial commitment period of the 45% rate for a period of three (3) years, we and Fortress will determine actual
office space utilization annually and if our utilization differs from the amount we have been billed, we will either receive credits
or be assessed incremental utilization charges. <font style="background-color: white">As of March 31, 2017, we had approximately
$0.1</font> million recorded in accounts payable related mostly to the build-out costs.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="background-color: white">In July
2015, we entered into a Shared Services Agreement (the “Shared Services Agreement”) with Fortress to share the cost
of certain services such as facilities use, personnel costs and other overhead and administrative costs. This Shared Services Agreement
requires us to pay our respective share of services utilized. In connection with the Shared Services Agreement, we</font> incurred
expenses of <font style="background-color: white">approximately $0.3 million and $0.1 million for shared services for the three
months ended March 31, 2017 and 2016, respectively, primarily related to shared personnel.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In May 2016, as part of a broader agreement with
Jubilant, an India-based biotechnology company, we entered into the JBET Agreement with Checkpoint, a subsidiary of Fortress, for
the development and commercialization of Jubilant’s novel BET inhibitor program in the field of hematological malignancies.
We paid Checkpoint an up-front licensing fee of $1.0 million and incurred expenses of $0.2 million for the first milestone achievement
as part of the JBET Agreement recorded in other research and development. As of March 31, 2017 and December 31, 2016, we had approximately
$0.7 million and $0.8 million, respectively, recorded in accounts payable, related to the JBET Agreement. Mr. Weiss is also the
Executive Chairman of Checkpoint.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">On
January 6, 2017, a purported securities class action complaint was filed in New York federal court against the Company and certain
of its directors, officers or consultants on behalf of all shareholders who purchased or otherwise acquired TG Therapeutics common
stock between September 15, 2014 and October 12, 2016 (the “Class Period”). The case was captioned <i>John Lyon v.
TG Therapeutics, Michael S. Weiss, Sean A. Power and Robert Niecestro</i>, Case No. 1:17-cv-00112-VM (S.D.N.Y.). The complaint
alleged that, throughout the Class Period various statements made by the Company regarding its GENUINE Phase 3 trial were materially
false or misleading when made in violation of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On January
24, 2017, a second purported class action complaint was filed in New York federal court against the Company and certain of its
directors, officers or consultants on behalf of all shareholders who purchased or otherwise acquired TG Therapeutics common stock
between September 15, 2014 and October 12, 2016. The case was captioned <i>Kenneth C. Wyzgoski v. TG Therapeutics, Michael S.
Weiss, Sean A. Power and Robert Niecestro</i>, Case No. 1:17-cv-00508-VM (S.D.N.Y.). The claims and allegations in the Wyzgoski
complaint were substantially identical to those in the Lyon case. By order dated March 23, 2017, the court consolidated the Lyon
and Wyzgoski cases into one action, captioned <i>In re TG Therapeutics Securities Litigation</i>, Case No. 1:17-cv-00112-VM (S.D.N.Y.),
appointed lead plaintiffs in the case, and approved lead plaintiffs’ selection of lead counsel. On April 5, 2017 the Court
so ordered a stipulation pursuant to which lead plaintiffs voluntarily dismissed the consolidated action in its entirety without
prejudice. <font style="font-weight: normal; font-style: normal; text-transform: none; letter-spacing: normal; word-spacing: 0px; background-color: rgb(255, 255, 255)">The
Company denies the allegations and claims made in the above-referenced actions and no consideration was given by the Company in
connection with lead plaintiffs’ voluntary dismissal of the consolidated action..</font></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">We are a biopharmaceutical company focused on
the acquisition, development and commercialization of novel treatments for B-cell malignancies and autoimmune diseases. Currently,
we are developing two therapies targeting hematologic malignancies. TG-1101 (ublituximab) is a novel, glycoengineered monoclonal
antibody that targets a specific and unique epitope on the CD20 antigen found on mature B-lymphocytes. We are also developing TGR-1202,
an orally available PI3K delta inhibitor. The delta isoform of PI3K is strongly expressed in cells of hematopoietic origin and
is believed to be important in the proliferation and survival of B-lymphocytes. Both TG-1101 and TGR-1202 are in clinical development
for patients with hematologic malignancies, with TG-1101 also in clinical development for autoimmune disorders. The Company also
has pre-clinical programs to develop IRAK4 (interleukin-1 receptor-associated kinase 4) inhibitors, BET (Bromodomain and Extra
Terminal) inhibitors, and anti-PD-L1 and anti-GITR antibodies.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">We also actively evaluate complementary products,
technologies and companies for in-licensing, partnership, acquisition and/or investment opportunities. To date, we have not received
approval for the sale of any of our drug candidates in any market and, therefore, have not generated any product sales from our
drug candidates.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">The accompanying unaudited condensed consolidated
financial statements were prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial
information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X of the Exchange Act. Accordingly,
they may not include all of the information and footnotes required by GAAP for complete financial statements. All adjustments that
are, in the opinion of management, of a normal recurring nature and are necessary for a fair presentation of the condensed consolidated
financial statements have been included. Nevertheless, these condensed consolidated financial statements should be read in conjunction
with the audited consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31,
2016. The accompanying condensed December 31, 2016 balance sheet has been derived from these statements. The results of operations
for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the entire fiscal
year or any other interim period.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">We have incurred operating losses since our inception,
expect to continue to incur operating losses for the foreseeable future, and may never attain profitable operations. As of March
31, 2017, we have an accumulated deficit of approximately $264.1 million.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">Our major sources of cash have been proceeds from
the private placement and public offering of equity securities. We have not yet commercialized any of our drug candidates and cannot
be sure if we will ever be able to do so. Even if we commercialize one or more of our drug candidates, we may not become profitable.
Our ability to achieve profitability depends on many factors, including our ability to obtain regulatory approval for our drug
candidates; successfully completing any post-approval regulatory obligations; and successfully commercializing our drug candidates
alone or with one or more partners. We may continue to incur substantial operating losses even if we begin to generate revenues
from our drug candidates.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">As of March 31, 2017, we had approximately $109.5
million in cash, cash equivalents, investment securities, and interest receivable, which we believe will be sufficient to fund
the Company’s planned operations through 2018. The actual amount of cash that we will need to operate is subject to many
factors, including, but not limited to, the timing, design and conduct of clinical trials for our drug candidates. We are dependent
upon significant future financing to provide the cash necessary to execute our current strategic plan, including the commercialization
of any of our drug candidates.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">Our common stock is listed on the Nasdaq Capital
Market and trades under the symbol “TGTX.”</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">In January 2017, the Financial Accounting Standards
Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2017-04, “Simplifying the Test for Goodwill
Impairment” (“ASU 2017-04”). ASU 2017-04 removes the requirement to compare the implied fair value of goodwill
with its carrying amount as part of step 2 of the goodwill impairment test. As a result, under ASU 2017-04, an entity should perform
its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should
recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however,
the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, ASU 2017-04:</p>
<table cellpadding="0" style="width: 100%">
<tr>
<td style="vertical-align: top; width: 72px; padding: 0.75pt; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">Clarifies the requirements for excluding and allocating foreign currency translation adjustments to reporting units in connection with an entity’s testing of reporting units for goodwill impairment.</font></td></tr>
<tr>
<td style="vertical-align: top; font: 12pt Times New Roman, Times, Serif; padding: 0.75pt"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">Clarifies that an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.</font></td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"></p>
<table cellpadding="0" style="width: 100%">
<tr>
<td style="vertical-align: top; width: 72px; padding: 0.75pt; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 8pt">●</font></td>
<td style="padding: 0.75pt; font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">Makes minor changes to the overview and background sections of certain Accounting Standards Codification (“ASC” or “Codification”) subtopics and topics as part of the Board’s initiative to unify and improve those sections throughout the Codification.</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">ASU 2017-04 is effective prospectively for annual
and interim periods beginning on or after December 15, 2019, and early adoption is permitted on testing dates after January 1,
2017. We are currently evaluating the impact the adoption of ASU 2017-04 will have on our consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Other pronouncements issued by the FASB or other
authoritative accounting standards group with future effective dates are either not applicable or not significant to our consolidated
financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The preparation of financial statements in conformity
with GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the applicable reporting period. Actual results could differ from those estimates. Such differences could be material
to the consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">We treat liquid investments with original maturities
of three months or less when purchased as cash and cash equivalents.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">We record cash pledged or held in trust as restricted
cash. As of March 31, 2017 and December 31, 2016, we have approximately $0.6 million of restricted cash pledged to secure a line
of credit as a security deposit for an <font style="background-color: white">Office Agreement</font> (see Note 8).</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">Investment securities at March 31, 2017 and December
31, 2016 consist of short-term government securities. We classify these securities as held-to-maturity. Held-to-maturity securities
are those securities in which we have the ability and intent to hold the security until maturity. Held-to-maturity securities are
recorded at amortized cost, adjusted for the amortization or accretion of premiums or discounts. Premiums and discounts are amortized
or accreted over the life of the related held-to-maturity security as an adjustment to yield using the effective interest method.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">A decline in the market value of any investment
security below cost, that is deemed to be other than temporary, results in a reduction in the carrying amount to fair value. The
impairment is charged to operations and a new cost basis for the security is established. Other-than-temporary impairment charges
would be included in interest and other (income) expense, net. Dividend and interest income are recognized when earned.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">Financial instruments that potentially subject
the Company to concentrations of credit risk consist primarily of cash and cash equivalents and short-term investments. The Company
maintains its cash and cash equivalents and short-term investments with high-credit quality financial institutions. At times, such
amounts may exceed federally-insured limits.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">We recognize license revenue in accordance with
the revenue recognition guidance of the FASB Codification. We analyze each element of our licensing agreement to determine the
appropriate revenue recognition. The terms of the license agreement may include payments to us of non-refundable up-front license
fees, milestone payments if specified objectives are achieved, and/or royalties on product sales. We recognize revenue from upfront
payments over the period of significant involvement under the related agreements unless the fee is in exchange for products delivered
or services rendered that represent the culmination of a separate earnings process and no further performance obligation exists
under the contract. We recognize milestone payments as revenue upon the achievement of specified milestones only if (1) the milestone
payment is non-refundable, (2) substantive effort is involved in achieving the milestone, (3) the amount of the milestone is reasonable
in relation to the effort expended or the risk associated with achievement of the milestone, and (4) the milestone is at risk for
both parties. If any of these conditions are not met, we defer the milestone payment and recognize it as revenue over the estimated
period of performance under the contract.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">Generally, research and development costs are
expensed as incurred. Non-refundable advance payments for goods or services that will be used or rendered for future research and
development activities are deferred and amortized over the period that the goods are delivered or the related services are performed,
subject to an assessment of recoverability. We make estimates of costs incurred in relation to external clinical research organizations,
or CROs, and clinical site costs. We analyze the progress of clinical trials, including levels of patient enrollment, invoices
received and contracted costs when evaluating the adequacy of the amount expensed and the related prepaid asset and accrued liability.
Significant judgments and estimates must be made and used in determining the accrued liability balance and expense in any accounting
period. We review and accrue CRO expenses and clinical trial study expenses based on work performed and rely upon estimates of
those costs applicable to the stage of completion of a study. Accrued CRO costs are subject to revisions as such trials progress
to completion. Revisions are charged to expense in the period in which the facts that give rise to the revision become known. With
respect to clinical site costs, the financial terms of these agreements are subject to negotiation and vary from contract to contract.
Payments under these contracts may be uneven, and depend on factors such as the achievement of certain events, the successful recruitment
of patients, the completion of portions of the clinical trial or similar conditions. The objective of our policy is to match the
recording of expenses in our financial statements to the actual services received and efforts expended. As such, expense accruals
related to clinical site costs are recognized based on our estimate of the degree of completion of the event or events specified
in the specific clinical study or trial contract.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.75in">           
        Prepaid research and development in our consolidated balance sheets includes, among other
things, certain costs to third party service providers related to development and manufacturing services as well as clinical development.
These agreements often require payments in advance of services performed or goods received. Accordingly, as of March 31, 2017 and
December 31, 2016, we recorded approximately $8.4 million and $5.7 million, respectively, in prepaid research and development related
to such advance agreements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">Income taxes are accounted for under the asset
and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary
differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases,
operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment
date. If the likelihood of realizing the deferred tax assets or liability is less than “more likely than not,” a valuation
allowance is then created.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">We recognize all stock-based payments to employees
and non-employee directors (as compensation for service) as noncash compensation expense in the condensed consolidated financial
statements based on the fair values of such payments. Stock-based compensation expense recognized each period is based on the value
of the portion of stock-based payment awards that is ultimately expected to vest during the period. Forfeitures are estimated at
the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">For stock-based payments to consultants and other
third-parties (including related parties), noncash compensation expense is determined at the “measurement date.” The
expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation
expense remains uncertain. We record compensation expense based on the fair value of the award at the reporting date. The awards
to consultants and other third-parties (including related parties) are then revalued, or the total compensation is recalculated
based on the then current fair value, at each subsequent reporting date.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">In addition, because some of the options, restricted
stock and warrants issued to employees, consultants and other third-parties vest upon achievement of certain milestones, the total
expense is uncertain. Compensation expense for such awards that vest upon the achievement of milestones is recognized when the
achievement of such milestones becomes probable.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">Basic net loss per share of our common stock is
calculated by dividing net loss applicable to the common stock by the weighted average number of our common stock outstanding for
the period. Diluted net loss per share of common stock is the same as basic net loss per share of common stock since potentially
dilutive securities from stock options, stock warrants and convertible preferred stock would have an antidilutive effect either
because we incurred a net loss during the periods presented or because such potentially dilutive securities were out of the money
and the Company realized net income during the periods presented. The amounts of potentially dilutive securities excluded from
the calculation were 3,634,008 and 6,869,500 for the three months ended March 31, 2017 and 2016, respectively. The following outstanding
shares of potentially dilutive securities were excluded from the computation of net loss per share attributable to common stockholders
for the periods presented because including them would have been antidilutive:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 8pt"><b>Three Months Ended March 31,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 8pt"><b>2017</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 8pt"><b>2016</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 78%"><font style="font-size: 8pt">Unvested restricted stock</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 8%; text-align: right"><font style="font-size: 8pt">3,619,016</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 8%; text-align: right"><font style="font-size: 8pt">5,674,415</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Warrants</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,177,137</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Shares issuable upon note conversion </font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 8pt">14,992</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 8pt">17,948</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">3,634,008</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">6,869,500</font></td>
<td> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">Long-lived assets are reviewed for potential impairment
when circumstances indicate that the carrying value of long-lived tangible and intangible assets with finite lives may not be recoverable.
Management’s policy in determining whether an impairment indicator exists, a triggering event, comprises measurable operating
performance criteria as well as qualitative measures. If an analysis is necessitated by the occurrence of a triggering event, we
make certain assumptions in determining the impairment amount. If the carrying amount of an asset exceeds its estimated future
cash flows, an impairment charge is recognized.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">Goodwill is reviewed for impairment annually,
or earlier when events arise that could indicate that an impairment exists. We test for goodwill impairment using a two-step process.
The first step compares the fair value of the reporting unit with the unit's carrying value, including goodwill. When the carrying
value of the reporting unit is greater than fair value, the unit’s goodwill may be impaired, and the second step must be
completed to measure the amount of the goodwill impairment charge, if any. In the second step, the implied fair value of the reporting
unit’s goodwill is compared with the carrying amount of the unit’s goodwill. If the carrying amount is greater than
the implied fair value, the carrying value of the goodwill must be written down to its implied fair value. We will continue to
perform impairment tests annually, at December 31, and whenever events or changes in circumstances suggest that the carrying value
of an asset may not be recoverable.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 45pt">Rent expense and lease incentives, including landlord
construction allowances, are recognized on a straight-line basis over the lease term, commencing generally on the date the Company
takes possession of the leased property. The Company records lease incentives as deferred rent and recognizes the lease incentives
as reductions of rental expense. The unamortized portion of deferred rent is included in deferred rent in the condensed consolidated
balance sheets.</p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 8pt"><b>Three Months Ended March 31,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 8pt"><b>2017</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-size: 8pt"><b>2016</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 78%"><font style="font-size: 8pt">Unvested restricted stock</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 8%; text-align: right"><font style="font-size: 8pt">3,619,016</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 8%; text-align: right"><font style="font-size: 8pt">5,674,415</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Warrants</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,177,137</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Shares issuable upon note conversion </font></td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 8pt">14,992</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-size: 8pt">17,948</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">3,634,008</font></td>
<td> </td>
<td> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">6,869,500</font></td>
<td> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>March 31, 2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Money market funds</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">15,106,834</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">20,978,947</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Checking and bank deposits</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">80,530,738</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">4,052,333</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">95,637,572</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">25,031,280</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>March 31, 2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Amortized cost, as adjusted</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Gross unrealized holding gains</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Gross unrealized holding losses</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Estimated fair value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Short-term investments:</font></td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">Obligations of domestic governmental agencies (maturing between April 2017 and September 2017) (held-to-maturity) </font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">13,823,332</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">607</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">5,255</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">13,818,684</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total short-term investment securities</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">13,823,332</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">607</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">5,255</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">13,818,684</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Amortized cost, as adjusted</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Gross unrealized holding gains</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Gross unrealized holding losses</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Estimated fair value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Short-term investments:</font></td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">Obligations of domestic governmental agencies (maturing between February 2017 and September 2017) (held-to-maturity) </font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">19,853,860</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">3,270</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2,492</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">19,854,638</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total short-term investment securities</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">19,853,860</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">3,270</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">2,492</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">19,854,638</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Financial liabilities at fair value as of March 31, 2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 1</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 2</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 3</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">5% Notes</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">174,657</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">174,657</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">174,657</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">174,657</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Financial liabilities at fair value as of December 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 1</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 2</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Level 3</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">5% Notes</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 9pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="width: 88%"><font style="font-size: 8pt">Fair value at December 31, 2016</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Interest accrued on face value of 5% Notes</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">202,748</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Change in fair value of Level 3 liabilities</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(96,966</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Fair value at March 31, 2017</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">174,657</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Number of Shares</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted Average Grant Date Fair Value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Outstanding at December 31, 2016</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">8,642,055</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">7.20</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">111,254</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">4.80</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Vested</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(3,629,798</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">5.10</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Forfeited</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(4,495</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">4.65</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at March 31, 2017</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">5,119,016</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">6.21</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Warrants</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted average exercise price</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Aggregate Intrinsic Value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 64%"><font style="font-size: 8pt">Outstanding at December 31, 2016</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 9%; padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">913,381</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">2.41</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; padding-bottom: 3pt"> </td>
<td style="width: 1%; border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">1,961,403</font></td>
<td style="width: 1%; padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Issued</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(887,585</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2.41</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expired</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(25,796</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td> </td>
<td style="text-align: right"> </td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at March 31, 2017</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"> </td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">--</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="6" style="text-align: center"><font style="font-size: 8pt"><b>Three months ended March 31,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Stock-based compensation expense associated with restricted stock</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">5,995,455</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,698,965</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">5,995,455</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">1,698,965</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"> <b>March 31, 2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="10" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2016</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Non-current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Non-current portion, net</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Total</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 40%"><font style="font-size: 8pt">Convertible 5% Notes Payable</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">174,657</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">174,657</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 0%; border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="width: 7%; border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">174,657</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">174,657</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1.5pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1.5pt double; text-align: right"><font style="font-size: 8pt">68,875</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
15106834
20978947
80530738
4052333
5255
2492
2492
5255
607
3270
3270
607
13823332
19853860
19853860
13823332
13818684
19854638
19854638
13818684
174657
68875
0
0
174657
0
0
68875
174657
68875
0
0
174657
0
0
68875
174657
68875
202748
-96966
8642055
5119016
111254
3629798
4495
7.20
6.21
4.80
5.10
4.65
913381
0
0
887585
25796
2.41
0.00
0.00
2.41
0.00
1961403
0
5995455
1698965
5995455
1698965
174657
68875
174657
68875
0
0
0
0
109500000
600000
600000
16900000
16700000
1125
177000000
1000000
2000000
1300000
1400000
300000
100000
700000
17000
400000
800000
0
300000
100000
100000
P15Y
1100000
400000
1300000
2180005
305000
2397583
9600000
P1Y4M24D
3104253
31600000
31000000
10.18
3634008
6869500
3619016
0
14992
5674415
1177137
17948
8400000
5700000
.50
.05
.05
2015-03-08
1000000
24000
.45
.001
2500000
88200000
2397583
5128206
769230
9.75
54000000
3381866
2017-03-14