Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v2.4.1.9
Stock-Based Compensation
6 Months Ended
Jan. 31, 2015
Stock-Based Compensation  
Stock-Based Compensation

Note 8— Stock-Based Compensation

 

The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period, with the exception of options granted subject to a consulting agreement, whereby the option vesting period and the service period are defined pursuant to the terms of the consulting agreement. Share-based compensation expense for awards granted during the three- and six-month periods ended January 31, 2015 and 2014, were based on the grant date fair value estimated using the Black-Scholes Option Pricing Model. Share-based compensation expense related to stock option grants to consultants, in which the grant was not entirely vested at the grant date, are marked-to-market each month. The Company’s expected volatility is derived from the historical daily change in the market price of its common stock since it exited shell status, as well as the historical daily changes in the market price for the peer group as determined by the Company. The Company uses the simplified method to calculate the expected term of options issued to employees and directors. The Company’s estimation of the expected term for stock options granted to parties other than employees or directors is the contractual term of the option award. The risk-free interest rate used in the Black-Scholes calculation is based on the prevailing U.S. Treasury yield in effect at the time of grant, commensurate with the expected term. Stock-based compensation expense recognized in the Company’s condensed statements of operations is based on awards ultimately expected to vest, reduced for estimated forfeitures. The Company has never paid any dividends on its common stock and does not anticipate paying dividends on its common stock in the foreseeable future.

 

During the three months ended January 31, 2015, the Company granted options to purchase 425,000 shares of the Company’s common stock to employees under the Company’s 2011 Stock Incentive Plan (the “2011 Plan”). The options issued under the 2011 Plan have a ten-year term, vest over three years, and have exercise prices ranging from $0.39 to $0.53.

 

During the six months ended January 31, 2015, the Company granted options to purchase 2,575,000 and 500,000 shares of the Company’s common stock to employees and consultants under the 2011 Plan, respectively. The options issued to employees within the 2011 Plan have a ten-year term, vest over a range of one to three years, and have exercise prices ranging from $0.41 to $0.53. The options issued to consultants have one- to three-year terms, vest in accordance with the terms of the applicable consulting agreement, and have exercise prices ranging from $0.39 to $0.43.

 

During the three month period ended January 31, 2014, the Company granted options to purchase 75,000 shares of the Company’s common stock to employees under the 2011 Plan. In addition, the Company granted an option to purchase up to 1,700,000 shares of the Company’s common stock outside the terms of the 2011 Plan in connection with the appointment of an officer, although the terms of the grant are substantially the same as the comparable grants made pursuant to the 2011 Plan. The options issued to the employees and the officer have a ten year term, vest over two to three years in accordance with the terms of the applicable stock option agreement, and have exercise prices ranging from $0.31 - $0.54.

 

The following assumptions were used to calculate the fair value of share-based compensation during the three months ended January 31, 2015 and 2014:

 

 

 

January 31, 2015

 

January 31, 2014

 

Expected volatility

 

90.35%-91.86%

 

91.99%-92.62%

 

Risk-free interest rate

 

1.31%-1.94%

 

1.67%-1.87%

 

Expected forfeiture rate

 

0.00% 

 

0.00% 

 

Expected dividend yield

 

 

 

Expected term

 

5-6.5 years

 

5-6 years

 

 

The following assumptions were used to calculate the fair value of share-based compensation during the six months ended January 31, 2015 and 2014:

 

 

 

January 31, 2015

 

January 31, 2014

 

Expected volatility

 

88.82%-93.11%

 

83.62% -92.52%

 

Risk-free interest rate

 

0.36%-2.13%

 

0.69%-1.87%

 

Expected forfeiture rate

 

0.00% 

 

0.00% 

 

Expected dividend yield

 

 

 

Expected term

 

2-6.5 years

 

3-6 years

 

 

Stock-based compensation expense recorded in the Company’s condensed statement of operations for the three- and six-month periods ended January 31, 2015 resulting from stock-based compensation awarded to the Company’s employees, directors and consultants was approximately $405,000 and $1,017,000, respectively.  Of this balance, $166,000 and $482,000 were recorded in research and development, respectively, and $239,000 and $535,000, respectively, were recorded in general and administrative in the Company’s condensed statement of operations for the periods ended January 31, 2015.

 

Stock-based compensation expense recorded in the Company’s condensed consolidated statement of operations for the three- and six-month periods ended January 31, 2014 resulting from stock-based compensation awarded to the Company’s employees, directors and consultants was approximately $221,000 and $292,000, respectively.  Of this balance, $155,000 and $163,000 was recorded to research and development, respectively, and $66,000 and $129,000, respectively, was recorded in general and administrative in the Company’s condensed consolidated statement of operations for the periods ended January 31, 2014.

 

The weighted-average grant date fair value of stock options granted during the three- and six-month periods ended January 31, 2015 and 2014 were $0.32 and $0.35, respectively, and $0.23 and $0.21, respectively.