Quarterly report pursuant to Section 13 or 15(d)

4. STOCKHOLDERS' EQUITY

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4. STOCKHOLDERS' EQUITY
 9 Months Ended
Sep. 30, 2016
Equity [Abstract]  
4. STOCKHOLDERS' EQUITY

On May 3, 2016, the Company completed an underwritten public offering of 2,176,154 shares of its common stock, for gross proceeds of approximately $14.1 million.  Net proceeds from this offering were approximately $13.0 million, after payment 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.

 

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 thereof, 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.

 

Oxford Debt Financing Warrant Issuance

 

In May 2016, the Company issued to Oxford warrants to purchase an aggregate of up to 24,800 shares of the Company’s common stock at an exercise price equal to $6.37 per share. The warrants became exercisable on May 13, 2016 for cash or by net exercise and will expire seven years after their issuance on May 13, 2023.

 

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.

  

    Nine Months Ended     Nine Months Ended  
    September 30, 2016     September 30, 2015  
Expected term   5.8-6.3 years     6.3 years  
Volatility     51-52%       51-57%  
Dividend yield     0.0       0.0  
Risk-free interest rate     1.54-1.79%       1.49-2.14%  

 

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, 2016 is 6.6 years.  The weighted average remaining contractual life of stock options exercisable at September 30, 2016 is 5.8 years.

 

A summary of the Company’s option activity under the 2007 Plan and 2014 Plan and related information is as follows:

 

    Nine Months Ended  
    September 30, 2016  
          Weighted  
          Average  
          Exercise  
    Shares     Price  
             
Outstanding at beginning of period     1,464,203     $ 8.02  
Forfeited     (21,334 )   $ 8.02  
Expired     (8,666 )   $ 7.88  
Granted     100,984     $ 6.20  
Outstanding at end of period and expected to vest     1,535,187     $ 7.90  
Options exercisable     1,102,900     $ 7.54  

 

Stock-based compensation expense for the three and nine months ended September 30, 2016 and 2015 is as follows:

 

    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2016     2015     2016     2015  
                         
Research and development   $ 95,076     $ 184,302     $ 383,909     $ 514,107  
Plasma centers     15,289       12,457       40,044       35,813  
General and administrative     152,598       251,173       572,135       671,742  
                                 
Total stock-based compensation expense   $ 262,963     $ 447,932     $ 996,088     $ 1,221,662  

 

As of September 30, 2016, the total compensation expense related to unvested options not yet recognized totaled $1,870,323. The weighted average vesting period over which the total compensation expense will be recorded related to unvested options not yet recognized at September 30, 2016 was approximately 2.3 years.