Quarterly report pursuant to Section 13 or 15(d)


6 Months Ended
Jun. 30, 2017
Equity [Abstract]  

In connection with the acquisition of the Biotest Assets (see Note 3) the Company issued 4,295,580 shares of its voting common stock and 8,591,160 shares of its non-voting common stock, respectively. The rights and preferences of the non-voting common are substantially the same as the common stock. BPC is prohibited from selling such shares for six months following the acquisition of BTBU and is thereafter limited to selling shares of the Company in excess of 15% of the outstanding shares of the Company in a 12-month period. The volume sale restriction expires on the three year anniversary from the BTBU acquisition (“Standstill Period"). The non-voting common stock will automatically convert into common stock upon (i) expiration of the Standstill Period, (ii) a liquidation event, (iii) Company insolvency, (iv) a permitted sale and (v) certain dilutive issuances as defined in the Company’s amended and restated certificate of incorporation.


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 $13.1 million, after payment of underwriting discounts and offering expenses of approximately $1.0 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 stock options granted under the Company’s 2007 Employee Stock Option Plan (the “2007 Plan”) and the ADMA Biologics, Inc. 2014 Omnibus Incentive Compensation Plan, as amended and restated (the “2014 Plan”), 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 stock options granted to employees and directors 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 limited data related to the Company's common 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. The following assumptions were used to determine the fair value of options granted during the six months ended June 30, 2017 and 2016:


    Six Months Ended   Six Months Ended
    June 30, 2017   June 30, 2016
Expected term     5.8 - 6.3 years       5.8 - 6.3 years  
Volatility     51-64%       51-52%  
Dividend yield     0.0       0.0  
Risk-free interest rate     1.77-2.29%       1.54-1.79%  


The weighted average remaining contractual life of stock options outstanding and expected to vest at June 30, 2017 is 8.0 years. The weighted average remaining contractual life of stock options exercisable at June 30, 2017 is 5.3 years.


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


    Six Months Ended
    June 30, 2017
    Shares   Weighted Average Exercise Price
Outstanding at beginning of period     1,535,187     $ 7.90  
Forfeited     (62,836 )   $ 9.12  
Expired     (7,686 )   $ 8.92  
Granted     1,856,595     $ 3.79  
Outstanding at end of period and expected to vest     3,321,260     $ 5.58  
Options exercisable     1,277,674     $ 7.66  


Stock-based compensation expense for the three and six months ended June 30, 2017 and 2016 is as follows:


    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2017   2016   2017   2016
Research and development   $ 68,434     $ 132,277     $ 121,417     $ 288,833  
Plasma centers     13,196       11,745       25,947       24,755  
General and administrative     223,973       166,923       394,116       419,537  
Cost of goods sold     5,760       —         5,760       —    
Total stock-based compensation expense   $ 311,363     $ 310,945     $ 547,240     $ 733,125  


As of June 30, 2017, the total compensation expense related to unvested options not yet recognized totaled $4,934,857. The weighted average vesting period over which the total compensation expense will be recorded related to unvested options not yet recognized at June 30, 2017 was approximately 3.1 years.