Quarterly report pursuant to Section 13 or 15(d)

STOCKHOLDERS' EQUITY

v2.4.0.6
STOCKHOLDERS' EQUITY
 6 Months Ended
Dec. 31, 2011
Stockholders' Equity Note Disclosure [Text Block]

NOTE C – STOCKHOLDERS’ EQUITY


Share-Based Compensation - Stock Options and Warrants


The Company accounts for options granted to employees by measuring the cost of services received in exchange for the award of equity instruments based upon the fair value of the award on the date of grant. The fair value of that award is then ratably recognized as expense over the period during which the recipient is required to provide services in exchange for that award. Options and warrants granted to consultants and other non-employees are recorded at fair value as of the grant date and subsequently adjusted to fair value at the end of each reporting period until such options and warrants vest, and the fair value of such instruments, as adjusted, is expensed over the related vesting period. Adjustments to fair value at each reporting date may result in income or expense, depending upon the estimate of fair value and the amount of expense recorded prior to the adjustment.


On August 12, 2008, the Company adopted the iBioPharma, Inc. 2008 Omnibus Equity Incentive Plan (the “Plan”) for employees, officers, directors, or external service providers. Under the provisions of the Plan, the Company may grant options to purchase stock and/or make awards of restricted stock up to an aggregate amount of 10,000,000 shares. There are 4,650,000 options available for future issuance under the Plan. Options granted under the Plan may be either “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, or non-statutory stock options at the discretion of the Board of Directors and as reflected in the terms of the written option agreement. Options granted under the Plan during the three and six months ended December 31, 2011 vest ratably at the end of each twelve-month period within either a three or five-year period from the date of grant, subject to certain conditions that result in acceleration of vesting or termination of the options. Previously granted options vest ratably at the beginning of each twelve-month period.


Share-based compensation expense was recorded as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31,

 

Six Months Ended
December 31,

 

 

 

 

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

Research and development

 

$

38,457

 

$

184,452

 

$

23,188

 

$

272,520

 

General and administrative

 

 

1,017,357

 

 

105,858

 

 

1,370,918

 

 

426,557

 

 

 

 

 

 

 

Total

 

$

1,055,814

 

$

290,310

 

$

1,394,106

 

$

699,077

 

 

 

 

 

 

 


During the three and six months ended December 31, 2011, the Board of Directors modified the cancellation provision of previously issued options, permitting an option holder, upon termination without cause, to exercise the vested portion of an option post-termination up to 10 years after the grant date. Current period option awards granted also include this provision. During the three months ended December 31, 2011, the Company estimated the effect of the modification to be approximately $633,000. Accordingly, for the three and six months ended December 31, 2011, the Company recorded a modification charge of approximately $451,000. The balance will be recorded over the remaining vesting period.


Summary of the changes in options outstanding during the six months ended December 31, 2011 and the year ended June 30, 2011 is as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of
Shares

 

Weighted
Average
Exercise
Price
Per Share

 

Weighted
Average
Remaining
Contractual
Term
(Years)

 

Aggregate
Intrinsic
Value

 

 

 

 

 

 

 

Outstanding at June 30, 2010

 

 

2,210,000

 

$

0.58

 

 

9.1

 

$

1,770,000

 

Granted

 

 

2,140,000

 

$

2.44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding at June 30, 2011 and expected to vest at June, 30, 2011

 

 

4,350,000

 

$

1.49

 

 

8.7

 

$

6,112,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Granted

 

 

1,000,000

 

$

1.96

 

 

9.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding at December 31, 2011 and expected to
vest at December 31, 2011

 

 

5,350,000

 

$

1.58

 

 

8.5

 

$

596,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Options exercisable at December 31, 2011

 

 

2,585,333

 

$

1.29

 

 

8.1

 

$

499,000

 

 

 

 

 

 

 

 

 

 

 

 

 


The weighted average fair value of options granted during the six months ended December 31, 2011 and 2010 were $1.70 and $1.99 per share, respectively on the dates of grant using the Black-Scholes option-pricing model. Options granted and options required to be revalued each reporting period were calculated with the following assumptions:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31,

 

Six Months Ended
December 31,

 

 

 

 

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

Risk free interest rate

 

 

1.1% to 2.23%

 

 

0.3% to 3.3%

 

 

1.1% to 2.23%

 

 

0.3% to 3.3%

 

Dividend yield

 

 

Zero

 

 

Zero

 

 

Zero

 

 

Zero

 

Volatility

 

 

94.8% to 96.8%

 

 

115%

 

 

94.8% to 96.8%

 

 

98% to 115%

 

Range of expected option life (in years)(1)

 

 

5.5 to 9.0

 

 

5.5 to 6.0

 

 

5.5 to 9.0

 

 

5.5 to 6.0

 

Range of expected option life (in years)(2)

 

 

8.4 to 8.6

 

 

9.3 to 9.5

 

 

8.4 to 8.8

 

 

9.3 to 9.5

 


On October 21, 2011, the Company issued 900,000 options to members of the Board of Directors and certain officers and 100,000 options to an employee to purchase shares of common stock at $1.96. These options vest between three to five years and expire in ten years.


(1)

Employee and Board of Director options

(2)

Non-employee options


A summary of the changes in warrants outstanding during the six months ended December 31, 2011 and year ended June 30, 2011 is as follows:


 

 

 

 

 

 

 

 

 

 

Number of
Shares

 

Weighted
Average
Exercise
Price
Per Share

 

 

 

 

 

Outstanding at June 30, 2010

 

 

3,085,811

 

$

2.91

 

Granted (1)

 

 

7,973,020

 

$

2.41

 

Exercised

 

 

(95,000

)

$

1.54

 

Cancelled(1)

 

 

(3,015,224

)

$

3.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding at June 30, 2011 and December 31, 2011

 

 

7,948,607

 

$

2.37

 

 

 

 

 

 

 

Exercisable at June 30, 2011

 

 

7,688,607

 

$

2.42

 

 

 

 

 

 

 

Exercisable at December 31, 2011

 

 

7,808,607

 

$

2.39

 

 

 

 

 

 

 


(1) Includes modification to 2,715,224 warrants to purchase common stock pursuant to the terms of the warrant agreement from the August 2008 offering due to the down round provision. The August 2008 warrants expire in August 2013.