Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

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Stockholders' Equity
3 Months Ended
Sep. 30, 2017
Stockholders' Equity [Abstract]  
STOCKHOLDERS' EQUITY

NOTE 9 - STOCKHOLDERS’ EQUITY

 

Exercise of warrants for non-cash

 

During the three months ended September 30, 2017, the Company issued approximately 16,700, shares of common stock resulting from the exercise on a non-cash basis of approximately 16,800 warrants.

 

Options

 

In December 2014, the Board of Directors adopted and the shareholders approved Relmada’s 2014 Stock Option and Equity Incentive Plan, as amended (the “Plan”), which allows for the granting of common stock awards, stock appreciation rights, and incentive and nonqualified stock options to purchase shares of the Company’s common stock to designated employees, non-employee directors, and consultants and advisors. The Plan allows for the granting of 1,611,769 options or stock awards. In August 2015, the board approved an amendment to the Plan. Among other things, the Plan Amendment updates the definition of “change of control” and provides for accelerated vesting of all awards granted under the plan in the event of a change of control of the Company. In January 2017, the stockholders approved an increase of 2,500,000 shares authorized to be issued under the Plan, raising the total shares allowed under the Plan to 4,111,769. At September 30, 2017, no stock appreciation rights have been issued. Stock options are exercisable generally for a period of 10 years from the date of grant and generally vest over four years. As of September 30, 2017, 3,565,172 shares were available for future grants under the Plan.

 

The Company utilizes the Black-Scholes option pricing model to estimate the fair value of stock options and warrants. The price of common stock prior to the Company being public was determined from a third party valuation. The risk-free interest rate assumptions were based upon the observed interest rates appropriate for the expected term of the equity instruments. The expected dividend yield was assumed to be zero as the Company has not paid any dividends since its inception and does not anticipate paying dividends in the foreseeable future. The expected volatility was based upon the Company’s historical volatility. The Company routinely reviews its calculation of volatility changes in future volatility, the Company’s life cycle, and other factors.

 

The Company uses the simplified method for share-based compensation to estimate the expected term for employee option awards for stock-based compensation in its option-pricing model. The Company uses the contractual term for non-employee options to estimate the expected term, for share-based compensation in its option-pricing model.

 

On February 13, 2017, Mr. Becker, the Company’s Chief Financial Officer, resigned and entered into a consulting agreement with the Company to provide financial, investor, digital media, and public relations services for the Company. As a result of Mr. Becker’s change from an employee to a consultant, his options and shares of restricted stock outstanding on such date continue to vest pursuant to the awards’ original terms and were reclassified as non-employee awards. The fair value of the awards will be re-measured at each reporting date until the earlier of (a) the performance commitment date or (b) the date the services required under the arrangement have been completed. 

 

During the three months ended September 30, 2017, there were no options granted.

 

At September 30, 2017, the Company has unrecognized stock-based compensation expense of approximately $323,700 related to unvested stock options over the weighted average remaining service period of 1.6 years.

 

A summary of the changes in options during the three months ended September 30, 2017 is as follows:

 

    Number 
of 
Options
    Weighted Average Exercise Price For Share     Weighted Average Remaining Contractual Term (Years)     Aggregate Intrinsic 
Value
 
Outstanding and expected to vest at June 30, 2017     559,972     $ 6.41       6.7     $ -  
Forfeited     (56,000 )   $ 8.15       -     $ -  
Outstanding and expected to vest at September 30, 2017     503,972     $ 6.22       6.4     $ -  
Options exercisable at September 30, 2017     412,404     $ 5.86       6.1     $ -  

 

Restricted stock

 

A summary of the changes in restricted stock awards during the three months ended September 30, 2017, is as follows:

 

    Number of Shares     Weighted Average Price Per Share  
Outstanding restricted stock awards at June 30, 2017     42,625     $ 14.21  
Forfeited     -     $ -  
Outstanding restricted stock awards at September 30, 2017     42,625     $ 14.21  

 

There were no restricted stock awards granted during the three months ended September 30, 2017. Restricted stock grants vest over four years. The Company has an unrecognized expense of approximately $5,900 related to unvested restricted stock grants which will be recognized over the remaining weighted average service period of 1.09 years. During the three months ended September 30, 2017, the Company did not issue any shares of common stock and 2,500 were vested and are to be issued.

  

Warrants

 

A summary of the changes in outstanding warrants during the three months ended September 30, 2017 is as follows:

 

    Number of Shares     Weighted Average Exercise Price Per Share     Weighted Average Remaining Contractual Term (Years)  
Outstanding and vested at June 30, 2017     3,886,866     $ 7.71       2.4  
Granted     3,384,666     $ 1.52       6.9  
Exercised     (16,770 )   $ -       -  
Outstanding and vested at September 30, 2017     7,254,762     $ 4.81       4.4


 

During the quarter ended September 30, 2017, the Company issued an aggregate of 2,986,666 warrants to the noteholders of the Convertible Promissory Notes and 398,000 warrants to the placement agent in connection with the notes with an exercise price of $1.50 and $1.65 respectively. The warrants are non-cancellable, vest upon issuance and expire on the seventh anniversary of the warrant date of issuance. The aggregate fair value of these warrants using the Black-Scholes option pricing model was approximately $917,200 in total based on the following assumption:

 

Risk free interest rate     2.13 %
Dividend yield     0 %
Volatility     85 %
Expected term (in years) (1)     7.00  

 

(1) call option value is calculated as the sum of intrinsic value plus 40% of time value

 

At September 30, 2017, and June 30, 2017, the Company does not have any unrecognized stock-based compensation expense related to outstanding warrants. At September 30, 2017 and June 30, 2017, the aggregate intrinsic value of warrants vested and outstanding was approximately $157,000 and $149,000, respectively. As the warrants granted during the quarter ended September 30, 2017 were in connection with the notes, the fair value of the warrants was recorded as a reduction to the carrying amount of the notes.

 

The following summarizes the components of stock-based compensation expense which includes stock options and restricted stock in the consolidated statements of operations for the three months ended September 30, 2017 and 2016 (rounded to nearest $00):

 

    Three Months Ended September 30,
2017
    Three Months Ended September 30,
2016
 
Research and development   $ 7,100     $ 42,600  
General and administrative     61,800       129,500  
Total   $ 68,900     $ 172,100