XML 37 R13.htm IDEA: XBRL DOCUMENT v2.4.0.8
Stockholders' Equity
 3 Months Ended
Jun. 30, 2014
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]
Note 6. Stockholders’ Equity
 
Initial Public Offering
 
The Company closed its IPO of the sale of 2,650,000 Units at a price of $7.25 per Unit on March 26, 2014. Following the closing of the IPO, during the three months ended June 30, 2014 and in connection with its IPO, the underwriters exercised a portion of the over-allotment option pursuant to which the Company sold an additional 154,290 shares of common stock at $6.6608 per share, which resulted in approximately $1,028,000 of aggregate net proceeds to the Company. In connection with the underwriters’ partial exercise of the over-allotment option, the Company issued to the representative of the underwriters a five-year warrant to purchase 5,400 shares of the Company’s common stock at an exercise price of $9.0625 per share (the “Representative’s Warrant”). The Representative’s Warrant is exercisable commencing one year from the date of issuance. The Representative’s Warrant and the shares of common stock underlying the Representative’s Warrant have been deemed compensation by Financial Industry Regulatory Authority, Inc. (“FINRA”) and are, therefore, subject to a 180-day lock-up pursuant to Rule 5110(g)(1) of FINRA.
 
Stock Warrants
 
A summary of the warrant activity during the three months ended June 30, 2014 is presented below:
 
 
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
 
 
Weighted
 
Average
 
 
 
 
 
 
 
 
 
Average
 
Remaining
 
 
 
 
 
 
Number of
 
Exercise
 
Life
 
Intrinsic
 
 
 
Warrants
 
Price
 
In Years
 
Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding, March 31, 2014
 
 
3,140,250
 
$
7.30
 
 
 
 
 
 
 
Granted
 
 
5,400
 
 
9.06
 
 
 
 
 
 
 
Exercised
 
 
-
 
 
-
 
 
 
 
 
 
 
Forfeited
 
 
-
 
 
-
 
 
 
 
 
 
 
Outstanding, June 30, 2014
 
 
3,145,650
 
$
7.31
 
 
1.8
 
$
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercisable, June 30, 2014
 
 
3,047,500
 
$
7.25
 
 
1.7
 
$
-
 
 
The following table presents information related to stock warrants at June 30, 2014:
 
Warrants Outstanding
 
Warrants Exercisable
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
Outstanding
 
Average
 
Exercisable
 
Exercise
 
Number of
 
Remaining Life
 
Number of
 
Price
 
Warrants
 
In Years
 
Warrants
 
 
 
 
 
 
 
 
 
 
 
 
 
$
7.2500
 
 
3,047,500
 
 
1.7
 
 
3,047,500
 
$
9.0625
 
 
98,150
 
 
-
 
 
-
 
 
 
 
 
3,145,650
 
 
1.7
 
 
3,047,500
 
 
Stock Options
 
The Company has computed the fair value of options granted using the Black-Scholes option pricing model. Option forfeitures are estimated at the time of valuation and reduce expense ratably over the vesting period. This estimate will be adjusted periodically based on the extent to which actual option forfeitures differ, or are expected to differ, from the previous estimate, when it is material. The Company estimated forfeitures related to option grants at an annual rate of 0% for options granted during the three months ended June 30, 2014. The expected term used for options issued to non-employees is the contractual life and the expected term used for options issued to employees and directors is the estimated period of time that options granted are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” employee option grants. Since the Company’s stock has not been publicly traded for a sufficiently long period of time, the Company is utilizing an expected volatility figure based on a review of the historical volatilities, over a period of time, equivalent to the expected life of the instrument being valued, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.
 
In applying the Black-Scholes option pricing model to stock options granted, the Company used the following weighted average assumptions:
 
 
 
For the Three Months Ended
 
 
 
June  30,
 
 
 
2014
 
 
2013
 
Risk free interest rate
 
 
1.67
%
 
 
n/a
 
Expected term (years)
 
 
5.61
 
 
 
n/a
 
Expected volatility
 
 
95
%
 
 
n/a
 
Expected dividends
 
 
0.00
%
 
 
n/a
 
 
The weighted average estimated fair value of the options granted during the three months ended June 30, 2014 was $4.79 per share. There were no options granted during the three months ended June 30, 2013.
 
On May 12, 2014, the Company granted options to employees and directors to purchase an aggregate of 332,500 shares of common stock at an exercise price of $6.37 per share, pursuant to the 2013 Employee, Director and Consultant Equity Incentive Plan (the “2013 Plan”). The shares vest ratably over three years on a quarterly basis. The aggregate grant date value of $1,593,000 will be recognized proportionate to the vesting period.
 
The Company recorded stock–based compensation expense related to stock options of $66,000 and $0 during the three months ended June 30, 2014 and 2013, respectively. As of June 30, 2014, there was $1,527,000 of unrecognized stock-based compensation expense related to stock options that will be amortized over a weighted average period of 2.9 years.
 
A summary of the stock option activity during the three months ended June 30, 2014 is presented below:
 
 
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
 
 
Weighted
 
Average
 
 
 
 
 
 
 
 
 
Average
 
Remaining
 
 
 
 
 
 
Number of
 
Exercise
 
Life
 
Intrinsic
 
 
 
Options
 
Price
 
In Years
 
Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding, March 31, 2014
 
 
-
 
$
-
 
 
 
 
 
 
 
Granted
 
 
332,500
 
 
6.37
 
 
 
 
 
 
 
Exercised
 
 
-
 
 
-
 
 
 
 
 
 
 
Forfeited
 
 
-
 
 
-
 
 
 
 
 
 
 
Outstanding, June 30, 2014
 
 
332,500
 
$
6.37
 
 
9.9
 
$
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercisable, June 30, 2014
 
 
-
 
$
-
 
 
-
 
$
-
 
 
The following table presents information related to stock options at June 30, 2014:
 
Options Outstanding
 
Options Exercisable
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
Outstanding
 
Average
 
Exercisable
 
Exercise
 
Number of
 
Remaining Life
 
Number of
 
Price
 
Options
 
In Years
 
Options
 
 
 
 
 
 
 
 
 
 
 
 
 
$
6.37
 
 
332,500
 
 
-
 
 
-
 
 
 
 
 
332,500
 
 
-
 
 
-
 
 
Restricted Stock Units
 
On May 11, 2014, the Company granted RSUs issuable for an aggregate of 409,355 shares to employees and directors, pursuant to the 2013 Plan. RSUs for 341,000 shares of common stock vest ratably over three years on a quarterly basis and had an aggregate grant date value of $2,148,000. RSUs for 68,355 shares had an aggregate grant date value of $431,000 and vest in equal installments based on achievement of the following: (1) enrollment of the first patient in the first pivotal clinical trial for RUT58-60 on or prior to May 11, 2017; (2) enrollment of the first patient in the second pivotal clinical trial for RUT58-60 on or prior to May 11, 2018; and (3) completion of the clinical study report containing the results of the second pivotal clinical trial for RUT58-60 on or prior to May 11, 2019.
 
The Company recorded stock–based compensation expense related to RSUs of $89,000 and $0 during the three months ended June 30, 2014 and 2013, respectively. As of June 30, 2014, there was $2,059,000 of unrecognized stock-based compensation expense related to RSUs that will be amortized over a weighted average period of 2.9 years. The Company recognizes stock-based compensation expense for RSUs with performance conditions if and when the Company concludes that it is probable that the performance condition will be achieved. As of June 30, 2014, the Company has not recognized any expense related to RSUs with performance conditions. As of June 30, 2014, there was $431,000 of unrecognized stock-based compensation expense related to RSUs with performance conditions.
 
A summary of RSU activity for the three months ended June 30, 2014 is presented below:
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
 
 
Average
 
Total
 
 
 
Number of
 
Grant Date
 
Grant Date
 
 
 
Units
 
Fair Value
 
Fair Value
 
 
 
 
 
 
 
 
 
 
 
 
Non-vested, March 31, 2014
 
 
-
 
$
-
 
$
-
 
Granted
 
 
409,355
 
 
6.30
 
 
2,579,000
 
Vested
 
 
-
 
 
-
 
 
-
 
Forfeited
 
 
-
 
 
-
 
 
-
 
Non-vested, June 30, 2014
 
 
409,355
 
$
6.30
 
$
2,579,000