Quarterly report pursuant to Section 13 or 15(d)

4. STOCKHOLDERS' EQUITY

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4. STOCKHOLDERS' EQUITY
 9 Months Ended
Sep. 30, 2015
Equity [Abstract]  
4. STOCKHOLDERS' EQUITY

On March 18, 2015, the Company announced the closing of an underwritten sale of 1,225,000 shares of its common stock, as well as 183,750 additional shares of its common stock pursuant to the full exercise of the over-allotment option granted to the underwriters,  for gross proceeds of approximately $11.3 million. Net proceeds from this offering were approximately $10.2 million, net of underwriting discounts and offering expenses of approximately $1.1 million. The shares were sold under a shelf registration statement on Form S-3 (File No. 333-200638) that was declared effective by the SEC on December 23, 2014.

 

Equity incentive plan

 

The fair value of employee options granted was determined on the date of grant using the Black-Scholes option valuation model. The Black-Scholes model was developed for use in estimating the fair value of publicly traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. The Company's employee stock options have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the fair value estimate. Because there has been minimal data for the Company's stock and very little historical experience with the Company's stock options, similar public companies and a pro rata percentage of the Company’s  common stock were used for calculating ADMA’s volatility for comparison and expectations as to the assumptions required for fair value computation using the Black-Scholes methodology.

 

  Three Months Ended   Nine Months Ended   Nine Months Ended
  September 30, 2015   September 30, 2015   September 30, 2014
Expected term 6.25 years   6.25 years   6.25 years
Volatility 51-54%   51-57%   63%
Dividend yield 0.0   0.0   0.0
Risk-free interest rate 1.75-2.14%   1.49-2.14%   2.22%

 

Guidance for stock-based compensation requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.   The Company has not experienced any material forfeitures of stock options and, as such, has not established a forfeiture rate since the stock options currently outstanding are primarily held by its senior management and directors.  The Company will continue to evaluate the effects of such future potential forfeitures, as they may arise, to evaluate its estimated forfeiture rate.

 

The weighted average remaining contractual life of stock options outstanding and expected to vest at September 30, 2015 is 7.2 years.  The weighted average remaining contractual life of stock options exercisable at September 30, 2015 is 6.4 years.

 

A summary of the Company’s option activity under the Plan and related information is as follows:

 

    Nine Months Ended  
    September 30, 2015  
          Weighted  
          Average  
          Exercise  
    Shares     Price  
             
Outstanding at beginning of period     1,048,927     $ 7.24  
Exercised     (7,514 )   $ 6.25  
Forfeited     (9,710 )   $ 9.16  
Granted     312,500     $ 10.17  
Outstanding at end of period and expected to vest     1,344,203     $ 7.91  
Options exercisable     812,059     $ 7.11  

 

   

Stock-based compensation expense for the three and nine months ended September 30, 2015 and 2014 is as follows:

 

    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2015     2014     2015     2014  
                         
Research and development   $ 184,302     $ 66,202     $ 514,107     $ 191,112  
Plasma centers     12,457       8,920       35,813       26,468  
General and administrative     251,173       251,938       671,742       703,814  
                                 
Total stock-based compensation expense   $ 447,932     $ 327,060     $ 1,221,662     $ 921,394  

 

As of September 30, 2015, the total compensation expense related to unvested options not yet recognized totaled $2,556,609. The weighted average vesting period over which the total compensation expense will be recorded related to unvested options not yet recognized at September 30, 2015 was approximately 2.5 years.