NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE
1 — ORGANIZATION AND PRINCIPAL ACTIVITIES
Ritter
Pharmaceuticals, Inc. (“Ritter” or the “Company”) is a Delaware corporation headquartered in Los Angeles,
California. The Company was formed as a Nevada limited liability company on March 29, 2004 under the name Ritter Natural Sciences,
LLC, and converted into a Delaware corporation on September 16, 2008.
Ritter
Pharmaceuticals, Inc. develops novel therapeutic products that modulate the human gut microbiome to treat gastrointestinal diseases.
The Company is advancing human gut health research by exploring the metabolic capacity of the gut microbiota, and translating
the functionality of these microbiome modulators into safe and effective applications. The Company’s lead drug candidate,
RP-G28, has the potential to become the first Food and Drug Administration (“FDA”) approved drug for lactose intolerance,
a condition that affects more than one billion people worldwide.
The
Company currently operates in one business segment focusing on the development and commercialization of RP-G28. The Company is
not organized by market and is managed and operated as one business. A single management team reports to the chief operating decision
maker, the Chief Executive Officer.
Initial
Public Offering
On
June 24, 2015, the Company’s registration statement on Form S-1 (File No. 333-202924) relating to its initial public offering
of its common stock was declared effective by the Securities and Exchange Commission (“SEC”). The shares began trading
on the NASDAQ Capital Market on June 24, 2015. The initial public offering closed on June 29, 2015, and 4,000,000 shares of common
stock were sold at an initial public offering price of $5.00 per share.
The
Company paid to the underwriters underwriting discounts and commissions of approximately $1.6 million in connection with the offering.
In addition, the Company incurred expenses of approximately $1 million in connection with the offering. Thus, the net offering
proceeds to the Company, after deducting underwriting discounts and commissions and offering expenses, were approximately $17.4
million.
Capitalization
In
connection with the Company’s initial public offering in June 2015, the Company effected a 1–for–7.15 reverse
split of its common stock. All references to shares of common stock outstanding, average number of shares outstanding and per
share amounts in these financial statements and notes to financial statements have been adjusted to reflect the reverse split
on a retroactive basis.
NOTE
2 — BASIS OF PRESENTATION
The
accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America (“GAAP”) and include all adjustments necessary for the fair presentation of the Company’s
financial position for the periods presented.
The
accompanying interim period unaudited condensed financial statements have also been prepared in accordance with GAAP and applicable
rules and regulations of the SEC regarding interim financial reporting. The condensed balance sheet as of June 30, 2016, the condensed
statements of operations for the three and six months ended June 30, 2016 and 2015, and the condensed statements of cash flows
for the six months ended June 30, 2016 and 2015, are unaudited, but include all adjustments, consisting only of normal recurring
adjustments, which the Company considers necessary for a fair presentation of its financial position, operating results and cash
flows for the periods presented. The condensed balance sheet at December 31, 2015 has been derived from audited financial statements
included in the Annual Report on Form 10-K filed with the SEC on March 21, 2016. The results for the three and six months ended
June 30, 2016 are not necessarily indicative of the results expected for the full fiscal year or any other period.
The
accompanying interim period unaudited condensed financial statements and related financial information included in this Quarterly
Report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2015.
RITTER
PHARMACEUTICALS, INC.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Going
Concern and Liquidity
The
accompanying condensed financial statements have been prepared assuming the Company will continue as a going concern, which contemplates,
among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company has
not generated any product revenue and has not achieved profitable operations. At June 30, 2016, the Company had working capital
of approximately $8.1 million, an accumulated deficit of approximately $34.4 million, and cash and cash equivalents of approximately
$10.8 million. There is no assurance that profitable operations will ever be achieved, and, if achieved, could be sustained on
a continuing basis. In addition, development activities, clinical and pre-clinical testing, and commercialization of the Company’s
products will require significant financing. These matters, among others, raise substantial doubt about the Company’s ability
to continue as a going concern.
Since
inception, the operations of the Company have been funded through the sale of common shares, preferred shares and convertible
debt. Management cannot be certain that additional funding will be available on acceptable terms, or at all. To the extent that
the Company raises additional funds by issuing equity securities, the Company’s stockholders may experience significant
dilution. Any debt financing, if available, may involve restrictive covenants that impact the Company’s ability to conduct
business. If the Company is not able to raise additional capital when required or on acceptable terms, the Company may have to
(i) significantly delay, scale back or discontinue the development and/or commercialization of one or more product candidates;
(ii) seek collaborators for product candidates at an earlier stage than otherwise would be desirable and on terms that are less
favorable than might otherwise be available; (iii) relinquish or otherwise dispose of rights to technologies, product candidates
or products that the Company would otherwise seek to develop or commercialize.
The
financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE
3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
There
have been no material changes in the Company’s significant accounting policies as of and for the six months ended June 30,
2016, as compared with the significant accounting policies described in the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2015.
Use
of Estimates
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
Cash
and Cash Equivalents
Cash
consists of amounts held in a financial institution and consists of immediately available fund balances. The funds are maintained
at a stable financial institution, generally at amounts in excess of federally insured limits. As of June 30, 2016 and December
31, 2015, approximately $10.5 million and approximately $15.6 million, respectively, in cash and cash equivalents were uninsured.
The Company has not experienced any loss on deposits of cash and cash equivalents to date.
Clinical
Trial and Pre-Clinical Study Accruals
The
Company makes estimates of accrued expenses as of each balance sheet date in its financial statements based on the facts and circumstances
known to it at that time. Accrued expenses for pre-clinical studies and clinical trials are based on estimates of costs incurred
and fees that may be associated with services provided by contract research organizations, clinical trial investigational sites,
and other related vendors. Payments under certain contracts with such parties depend on factors such as successful enrollment
of patients, site initiation and the completion of milestones. In accruing service fees, management estimates the time period
over which services will be performed and the level of effort to be expended in each period. If possible, the Company obtains
information regarding unbilled services directly from these service providers. However, the Company may be required to estimate
these services based on other information available to it. If the Company underestimates or overestimates the activity or fees
associated with a study or service at a given point in time, adjustments to research and development expenses may be necessary
in future periods. Historically, estimated accrued liabilities have approximated actual expense incurred. Subsequent changes in
estimates may result in a material change in the Company’s accruals.
RITTER
PHARMACEUTICALS, INC.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Recent
Accounting Pronouncements
In
February 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-02,
Leases (Topic 842)
(“ASU
2016-02”). The provisions of ASU 2016-02 set out the principles for the recognition, measurement, presentation and disclosure
of leases for both parties to a contract (
i.e.,
lessees and lessors). The new standard requires lessees to apply a dual
approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively
a financed purchase by the lessee. This classification will determine whether the lease expense is recognized based on an effective
interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right-of-use asset
and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term
of 12 months or less will be accounted for under the existing guidance for operating leases today. Topic 842 supersedes the previous
lease standard, Topic 840
Leases
. The guidance is effective for annual periods and interim periods within those annual
periods beginning after December 15, 2018, and is effective for the Company for the year ending December 31, 2019. The Company
is currently evaluating the impact that the implementation of this standard will have on the Company’s consolidated financial
statements.
NOTE
4 — PROPERTY AND EQUIPMENT
Property
and equipment consists of the following:
|
|
Estimated
Life
|
|
June
30, 2016
|
|
|
December
31, 2015
|
|
Computer
equipment
|
|
5
years
|
|
$
|
10,274
|
|
|
$
|
9,696
|
|
Furniture
and fixtures
|
|
7
years
|
|
|
23,325
|
|
|
|
15,840
|
|
Total
property and equipment
|
|
|
|
|
33,599
|
|
|
|
25,536
|
|
Accumulated
depreciation
|
|
|
|
|
(7,427
|
)
|
|
|
(4,848
|
)
|
Property
and equipment, net
|
|
|
|
$
|
26,172
|
|
|
$
|
20,688
|
|
Depreciation
expense of approximately $1,300 and $300 was recognized for the three months ended June 30, 2016 and 2015, respectively, and approximately
$2,600 and $600 was recognized for the six months ended June 30, 2016 and 2015, respectively, and classified in general and administrative
expense in the accompanying unaudited condensed statements of operations.
NOTE
5 — COMMITMENTS AND CONTINGENCIES
Master
Services Agreement
On
December 30, 2015, the Company entered into a Master Service Agreement with Covance, Inc. (“Covance”), with an effective
date of December 29, 2015. Pursuant to the terms of the Master Service Agreement, Covance (or one or more of its affiliates) will
provide Phase 1, 2, 3, and 4 clinical services for a clinical study or studies to the Company, and, at the request of the Company,
assist with the design of such studies, in accordance with the terms of separate individual project agreements to be entered into
by the parties. The term of the agreement is for three years and will renew automatically for successive one year periods unless
Covance is no longer providing services under the agreement or either party has terminated the agreement upon written notice.
The Company may terminate the Master Service Agreement or any individual project agreement entered into under the Master Service
Agreement prior to the applicable study’s completion at any time for any reason upon 30 days written notice to Covance,
except when the reason for termination is the safety of subjects, in which case it may be terminated immediately. Covance may
not terminate any individual project agreement without cause, except when the reason for the termination is the safety of subjects,
in which case it may be terminated immediately. In the event of a termination of the Master Service Agreement, Covance will be
entitled to full payment for (i) work performed on the applicable project through the date work on such project is concluded and
(ii) reimbursement for all non-cancellable and non-refundable expenses and financial obligations which Covance (or an affiliate)
has incurred or undertaken on behalf of the Company.
Clinical
Supply and Cooperation Agreement with Ricerche Sperimentali Montale (“Ricerche”) and Inalco SpA (“Inalco”)
Effective
July 24, 2015, the Company entered into an amended Clinical Supply and Cooperation Agreement (the “Amended Supply Agreement”)
with Ricerche and Inalco (collectively, “RSM”). The Amended Supply Agreement amends certain terms of the Clinical
Supply and Cooperation Agreement, dated December 16, 2009, amended on September 25, 2010 (the “Existing Supply Agreement”).
RITTER
PHARMACEUTICALS, INC.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Under
the Existing Supply Agreement, RSM granted the Company an exclusive worldwide option in a specified field and territory to assignment
of all right, title and interest to a purified Galacto-oligosaccharides product (“Improved GOS”), the composition
of matter of the Improved GOS and any information relating to the Improved GOS, including certain specified technical information
and other intellectual property rights (the “Improved GOS IP”). Pursuant to the amended terms, the Company could exercise
the option by paying RSM $800,000 within ten days after the effective date of the Amended Supply Agreement. The Company exercised
this option on July 30, 2015 and RSM transferred the Improved GOS IP to the Company. Under the terms of the Existing Supply Agreement,
if a further option payment of $1 million due in the future is not made, the Company may be required to return the Improved GOS
IP to RSM.
The
Amended Supply Agreement also provides that the Company must pay RSM $400,000 within 10 days following FDA approval of a new drug
application for the first product owned or controlled by the Company using Improved GOS as its active pharmaceutical ingredient.
In addition, the Company agreed to purchase 350 kilos of Improved GOS for the sum of $250 per kilo for clinical supply of Improved
GOS instead of $2,000 per kilo as under the Existing Supply Agreement.
In
consideration for RSM entering into the Amended Supply Agreement, the Company issued 100,000 shares of its common stock, par value
$0.001 per share (the “RSM Shares”), to RSM on November 30, 2015. Fair value of these shares totaling $416,000 was
recognized in stockholders’ equity in the Company’s balance sheet as of December 31, 2015. The stock purchase agreement
includes a lock-up agreement by RSM in favor of the Company pursuant to which RSM will not be allowed to sell the RSM Shares for
a period ending on the earlier of (i) the public release by the Company of the final results of its Phase 2b/3 clinical trial
of RP-G28 and (ii) the filing of the Company’s Quarterly Report on Form 10-Q with the Securities and Exchange Commission
for the fiscal quarter in which the Company receives the results of its Phase 2b/3 clinical trial of RP-G28.
Lease
Agreement
The
Company leases office space for its headquarters in California. Until September 30, 2015, the Company leased office and storage
space pursuant to a two-year agreement which called for a minimum monthly rental payment of approximately $5,000 with an annual
increase of 3%.
On
July 9, 2015, the Company entered into a lease with Century Park, a California limited partnership, pursuant to which the Company
is leasing approximately 2,780 square feet of office space in Los Angeles, California for its headquarters. The lease provides
for a term of sixty-one (61) months, commencing on October 1, 2015. The Company paid no rent for the first month of the term and
will pay base rent of $9,174 per month for months 2 through 13 of the term, with increasing base rent for each twelve-month period
thereafter under the term of the lease to a maximum of $10,325 per month for months 50 through 61. The base rent payments do not
include the Company’s proportionate share of any operating expenses, including real estate taxes. The Company has the option
to extend the term of the lease for one five-year term, provided that the rent would be subject to market adjustment at the beginning
of the renewal term.
Rent
expense, which is recognized on a straight-line basis over the lease term, was approximately $28,700 and $15,000 for the three
months ended June 30, 2016 and 2015, respectively, and $57,500 and $30,000 for the six months ended June 30, 2016 and 2015, respectively,
and is recorded in general and administrative expenses in the accompanying unaudited condensed statements of operations.
Employment
Agreements
Michael
D. Step
On
December 2, 2014, Michael D. Step accepted an offer letter from the Company setting forth the terms of his employment as Chief
Executive Officer. The offer letter provides that Mr. Step is entitled to an annual base salary of $360,000 and a total of three
grants of options to purchase common stock of the Company.
The
first two options entitle Mr. Step to purchase 646,537 and 73,377 shares of the Company’s common stock, respectively, for
an exercise price of $5.86 per share. Each of these options was immediately exercisable in full as of the date of the grant,
with 44/48
ths
of the total number of shares covered by each option subject to a right of repurchase by the Company
upon termination of Mr. Step’s employment with the Company for any reason. This right of repurchase lapses over a period
of 44 months, with 1/44
th
of the total number of shares subject to the right of repurchase lapsing on January 1, 2015
and on the first day of each month thereafter. In addition, the right of repurchase will lapse in its entirety upon a termination
of Mr. Step’s employment under certain circumstances.
RITTER
PHARMACEUTICALS, INC.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
third option became exercisable upon the closing of the Company’s initial public offering on June 29, 2015. The option is
for a total of 163,799 shares of the Company’s common stock, which, together with the shares subject to the first option,
represent 7.5% of the shares of common stock deemed to be outstanding at June 29, 2015 on a fully-diluted basis, after giving
effect to the number of shares subject to the third option. Seventy-five percent of the shares subject to the third option are
subject to a right of repurchase by the Company upon termination of Mr. Step’s employment for any reason. This right of
repurchase lapses with respect to 1/36
th
of the total number of shares subject to the right of repurchase on the first
day of each month following the date on which the third option becomes exercisable. In addition, the right of repurchase will
lapse in its entirety upon Mr. Step’s termination of employment under certain circumstances.
Additionally,
under the terms of his Executive Severance and Change in Control Agreement, also effective on December 2, 2014, Mr. Step is entitled
to receive certain payments in the event his employment is terminated under certain circumstances.
Andrew
Ritter and Ira Ritter
On
September 25, 2013, the board of directors approved the Executive Compensation Plan (the “Compensation Plan”) setting
forth certain compensation to be paid to Andrew Ritter, the current President and former Chief Executive Officer, and Ira Ritter,
the current Chief Strategic Officer (“CSO”), for their respective contributions to the Company. Effective June 29,
2015, in connection with the Company’s initial public offering, Andrew Ritter and Ira Ritter accepted offer letters from
the Company setting forth the terms of their employment as President and CSO, respectively. The offer letters superseded the Compensation
Plan.
Their
respective offer letters provide that Andrew Ritter is entitled to an annual base salary of $310,000 and Ira Ritter is entitled
to an annual base salary of $295,000. In accordance with his offer letter, Andrew Ritter also became entitled to receive up to
$180,000 payable over a three-year period for tuition reimbursement which has been paid as of June 30, 2016. $75,000 was recognized
as tuition reimbursement in general and administrative expenses in the accompanying unaudited condensed statements of operations
for the three and six months ended June 30, 2016.
Additionally,
under the terms of their Executive Severance and Change in Control Agreements, also effective on June 29, 2015, each of Andrew
Ritter and Ira Ritter is entitled to receive certain payments in the event their employment is terminated under certain scenarios.
Pursuant
to their respective offer letters, Andrew Ritter and Ira Ritter each have the opportunity to earn an annual bonus based upon a
percentage of their base salary and the achievement of specific performance as determined by the Company. The initial target bonus
opportunities are 40% and 35% of the base salary for Andrew Ritter and Ira Ritter, respectively. The board of directors determined
that the specific performance requirements were met for fiscal year 2015 and accordingly, Andrew Ritter received 40% of his base
salary, or $124,000 and Ira Ritter received 35% of his base salary, or $103,250. These bonus payments were recognized in general
and administrative expense in the statements of operations for the year ended December 31, 2015.
Pursuant
to the Compensation Plan, as in effect prior to entering into their offer letters, Andrew Ritter and Ira Ritter had bonus opportunities
to, upon the satisfaction of the events described below, each potentially receive the following cash payments and each potentially
receive the following options to purchase up to 48,951 shares of the Company’s common stock (the “Executive Options”)
pursuant to the 2008 Stock Plan:
|
●
|
FDA
Meeting Bonus Opportunities
. Each executive was entitled to receive, and in April 2013 each executive received, a one-time
cash bonus of $10,000 for a milestone associated with meeting with the FDA regarding RP-G28’s path to FDA approval.
In addition, upon satisfaction of this milestone, the executives became entitled to 3,496 of the Executive Options, of which
2,360 shares vested and became exercisable as of September 25, 2013, the grant date, and the remaining 1,136 shares vesting
ratably in 36 equal monthly installment beginning on September 30, 2013.
|
|
|
|
|
●
|
Clinical
Trial Funding Commitment Bonus Opportunities
. Each executive was entitled to receive a one-time cash bonus of $75,000
upon our receipt of a commitment by a third party to fund a Phase 2 or later clinical trial; provided, however, that no such
bonus would be paid at any time the Company had less than $2,000,000 in available cash. In addition, upon the satisfaction
of this milestone, 35% of 10,489 shares of the Executive Options would vest and become exercisable, with the balance of the
10,489 shares vesting in 36 equal monthly installments beginning on the last day of the following month. The board of directors
determined that this milestone was satisfied; accordingly, each executive received a bonus of $75,000, which was recognized
in general and administrative expenses in the statements of operations for the year ended December 31, 2015. In addition,
3,671 shares of the Executive Options vested and became exercisable as of June 29, 2015, with the balance of 6,818 shares
vesting ratably on a monthly basis beginning July 31, 2015.
|
RITTER
PHARMACEUTICALS, INC.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
|
●
|
Fundraising
Bonus Opportunities
. Each executive was entitled to receive (i) a one-time cash bonus of $50,000 upon the sale of additional
equity capital for cash, in one or more closings after July 17, 2012, and/or the actual deployment of funds by a third party
for a clinical trial in an aggregate amount in excess of $2,000,000 and (ii) a one-time cash bonus of $150,000 upon the sale
of additional equity capital for cash, in one or more closings after July 17, 2012 and/or the actual deployment of funds by
a third party for a clinical trial in an aggregate amount in excess of $10,000,000 (which such bonus would be reduced by any
cash bonus paid under subsection (i)); provided, however, that no bonus under subsection (i) or (ii) would be paid at any
time the Company had less than $2,000,000 in available cash. In addition, upon the satisfaction of the milestone described
in subsection (i), 35% of 6,993 shares of the Executive Options would vest and become exercisable, with the balance of the
6,993 shares vesting in 36 equal monthly installments beginning on the last day of the following month, and, upon satisfaction
of the milestone described in subsection (ii), 35% of 13,986 shares of the Executive Options would vest and become exercisable,
with the balance of the 13,986 shares vesting in 36 monthly installments beginning on the last day of the following month.
The board of directors determined that this milestone as described in subsection (ii) above was satisfied upon the closing
of the initial public offering on June 29, 2015, raising approximately $17.4 million, net of offering costs; accordingly,
each executive received a bonus of $150,000 which was recognized in general and administrative expenses in the statements
of operations for the year ended December 31, 2015. In addition, 4,895 shares of the Executive Options vested and became exercisable
as of June 29, 2015, with the balance of 9,091 shares vesting ratably on a monthly basis beginning July 31, 2015.
|
|
|
|
|
●
|
License
Event Bonus Opportunities
. Each executive was entitled to receive the following bonus payments in connection with the
closing of an exclusive license of RP-G28 and/or any future product candidate developed by the Company from time to time during
the term of the Compensation Plan by and/or any option to exclusively license such product candidate to a third party (referred
to under the Compensation Plan as a “License Event”) with a minimum upfront payment to the Company of $2,000,000:
|
|
●
|
A
graduated cash bonus equal to (i) 5% of the Initial Period License Payment (as defined in the Compensation Plan) up to $5,000,000;
(ii) 4% of the Initial Period License Payment in excess of $5,000,000 up to $10,000,000; and (iii) 3% of the Initial Period
License Payment in excess of $10,000,000. In addition, upon our receipt of an Initial Period License Payment of more than
$2,000,000, 35% of 45,454 shares of their Executive Options will vest and become exercisable, with the balance of the 45,454
shares vesting in 36 monthly installments beginning on the last day of the following month.
|
|
|
|
|
●
|
A
cash bonus equal to 3% of any Annual Excess Milestone Payments (as defined in the Compensation Plan); provided, however that
no such bonus may be paid at any time the Company has less than $1,000,000 in available cash. In addition, upon our receipt
of an Annual Excess Milestone Payment, 35% of 6,993 shares of their Executive Options will vest and become exercisable, with
the balance of the 6,993 shares vesting in 36 monthly installments beginning on the last day of the following month.
|
As
of December 31, 2015, 27,972 of the maximum 48,951 Executive Options potentially issuable to each executive had been issued to
each executive subject to the vesting conditions described above.
Legal
The
Company is not currently involved in any legal matters arising in the normal course of business. From time to time, the Company
could become involved in disputes and various litigation matters that arise in the normal course of business. These may include
disputes and lawsuits related to intellectual property, licensing, contract law and employee relations matters. Periodically,
the Company reviews the status of significant matters, if any exist, and assesses its potential financial exposure. If the potential
loss from any claim or legal claim is considered probable and the amount can be estimated, the Company accrues a liability for
the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such
uncertainties, accruals are based on the best information available at the time. As additional information becomes available,
the Company reassesses the potential liability related to pending claims and litigation.
RITTER
PHARMACEUTICALS, INC.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE
6 — STOCKHOLDERS’ EQUITY
Common
Stock
As
of December 31, 2014, the Company was authorized to issue 50,000,000 shares of common stock with a par value of $0.001 per share.
Effective June 17, 2015, the Company effected a 1-for-7.15 reverse stock split. All common share amounts and per share amounts
reflected in these unaudited condensed financial statements and notes to unaudited condensed financial statements have been adjusted
to reflect that reverse stock split. The Company amended and restated its Certificate of Incorporation on June 29, 2015 (the “Amended
Certificate”) and reduced the authorized shares of the Company’s common stock to 25,000,000 with a par value of $0.001
per share.
As
of June 30, 2016, the Company had a total of 8,584,661 shares of common stock issued and outstanding.
Initial
Public Offering
On
June 29, 2015, the Company closed its initial public offering, selling 4,000,000 shares of the Company’s common stock at
an initial public offering price of $5.00 per share, for aggregate gross proceeds to the Company of $20 million. The Company paid
to the underwriters underwriting discounts and commissions of approximately $1.6 million in connection with the offering, and
approximately $1 million of other expenses in connection with the offering. The underwriters paid an aggregate purchase price
of $100 for warrants to purchase 160,000 shares of the Company’s common stock, representing 4.0% of the initial public offering
shares, at an exercise price of $6.25 per share, which equaled 125.0% of the initial public offering price. The warrants were
exercisable on June 29, 2016 and expire on June 29, 2020. Effective prior to the closing of the initial public offering, the Company
converted all of its outstanding shares of Series A-1, Series A-2, Series A-3, Series B, and Series C preferred into an aggregate
of 3,322,652 shares of the Company’s common stock.
Common
Stock Purchase Agreement
On
December 18, 2015, the Company entered into a common stock purchase agreement (the “Purchase Agreement”), with Aspire
Capital Fund, LLC, an Illinois limited liability company, (“Aspire Capital”), which provides that, upon the terms
and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of
$10.0 million of the Company’s shares of common stock over the approximately 30-month term of the Purchase Agreement. In
consideration for entering into the Purchase Agreement, concurrently with the execution of the Purchase Agreement, the Company
issued to Aspire Capital 188,864 shares of the Company’s common stock as a commitment fee (the “Commitment Shares”).
The fair value of the Commitment Shares were capitalized and recorded as a reduction of additional paid-in capital. Upon execution
of the Purchase Agreement, the Company agreed to sell to Aspire Capital 500,000 shares of common stock (the “Initial Purchase
Shares”) at $2.00 per share for proceeds of $1.0 million.
The
Company may sell an additional 888,835 shares of common stock to Aspire Capital in the future pursuant to the terms of the Purchase
Agreement. On any trading day on which the closing sale price of the Company’s common stock exceeds $0.50, the Company has
the right, in its sole discretion, to present Aspire Capital with a purchase notice, directing Aspire Capital (as principal) to
purchase up to 100,000 shares of the Company’s common stock per trading day, for up to $9.0 million of the Company’s
common stock in the aggregate at a per share price, calculated by reference to the prevailing market price of the Company’s
common stock (as provided in the Purchase Agreement).
Concurrently
with entering into the Purchase Agreement, the Company also entered into a registration rights agreement with Aspire Capital,
as amended (the “Registration Agreement”), in which the Company agreed to file one or more registration statements,
as permissible and necessary to register under the Securities Act of 1933, as amended (the “Securities Act”), the
sale of the shares of its common stock that have been and may be issued to Aspire Capital under the Purchase Agreement. On December
31, 2015, the Company filed a registration statement on Form S-1 (File No. 333-208818) pursuant to the terms of the Registration
Agreement, which registration statement was declared effective on February 11, 2016.
Preferred
Stock
The
Company’s board of directors is authorized, subject to any limitations prescribed by law, to provide for the issuance of
the authorized shares of preferred stock in series and to establish the number of shares to be included in each such series, and
to fix the designation, powers, preferences and rights of the shares of each such series and any qualifications, limitations or
restrictions thereon.
RITTER
PHARMACEUTICALS, INC.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Pursuant
to the Amended Certificate, the Company is authorized to issue 5,000,000 shares of preferred stock, $0.001 par value per share.
Prior to the Amended Certificate and as of December 31, 2014, the Company was authorized to issue 7,200,000 shares, 1,687,500
shares, 4,220,464 shares, 7,658,182 shares, and 4,500,000 shares of Series A-1, Series A-2, Series A-3, Series B, and Series C
preferred stock, respectively, with a par value of $0.001 per share.
Upon
the closing of the Company’s initial public offering, all outstanding shares of convertible preferred stock and preferred
stock subject to redemption were converted into an aggregate of 3,322,652 shares of common stock. The following provides material
terms and certain historical information regarding the Series A-1, Series A-2, Series A-3, Series B and Series C Preferred Stock
prior to their conversion to common stock:
Redemption.
At any time after five years following the date of the initial issuance of the Series A-3, Series B, or Series C preferred
stock, as applicable, and at the option of the holders of a majority of the then outstanding shares of Series A-3, Series B, and
Series C preferred stock, voting together as a single class, the Company was required to redeem any outstanding shares that have
not been converted by paying cash in an amount per share equal to the liquidation preference of $0.62 and $1.30 for the Series
A-3 and Series C preferred stock, respectively, and $1.19 per share, plus any accrued but unpaid dividends, for the Series B preferred
stock. Given the holders’ redemption option, the Series A-3, Series B, and Series C preferred stock is classified as preferred
stock subject to redemption in the accompanying balance sheets.
Dividends.
The holders of outstanding shares of preferred stock were entitled to receive dividends, when, as and if declared by the Company’s
board of directors. The annual dividend rate was $0.00556 per share for the Series A-1 preferred stock, $0.032 per share for the
Series A-2 preferred stock, $0.04957 per share for the Series A-3 preferred stock, $0.09524 per share for the Series B preferred
stock, and $0.104 for Series C preferred stock (subject to adjustment). The right to receive dividends on shares of Series B preferred
stock was cumulative and the dividends accrue to holders of Series B preferred stock whether or not dividends are declared or
paid in a calendar year. Undeclared dividends in arrears for the Series B preferred stock was approximately $2 million as of June
29, 2015. The right to receive dividends on shares of Series A and Series C preferred stock was not cumulative and no right to
such dividends accrued to holders of Series A or Series C preferred stock.
Liquidations
.
In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, Series B and Series
C preferred stockholders were entitled to receive an amount per share equal to the sum of the original purchase price of $1.19
plus all cumulative but unpaid dividends for Series B, and $1.30 for Series C. If upon the liquidation, the available assets were
insufficient to permit payments to Series B and Series C holders, the entire assets legally available would have been distributable
on a pro rata basis among the holders in proportion to the full amounts they would have otherwise been entitled to receive. Upon
the completion of the distribution to the holders of the Series B and Series C preferred stock, the holders of the Series A preferred
stock would have been entitled to receive, prior and in preference to any distribution of any of the assets of the Company to
the holders of all other capital stock by reason of their ownership of such stock, an amount per share equal to the sum of the
original issue price per share of $0.07, $0.40, and $0.62 for Series A-1, Series A-2, and Series A-3 preferred stock, respectively,
plus any accrued but unpaid dividends on the preferred stock. Any remaining assets would have been distributed pro rata among
the preferred and common shareholders.
Prepaid
Forward Sale of Preferred Stock
Research
and Development Agreement & License
On
November 30, 2010, the Company concurrently entered into a Research and Development Agreement & License (“R&D Agreement”)
and a Put and Call Option Agreement (“Option Agreement”) with two commonly controlled entities, Kolu Pohaku Technologies,
LLC (“KPT”) and Kolu Pohaku Management, LLC (“KPM”). The R&D Agreement was subsequently amended on
July 6, 2011, September 30, 2011, February 6, 2012 and November 4, 2013 to increase the funding received by the Company.
RITTER
PHARMACEUTICALS, INC.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
R&D Agreement between the Company and KPM and KPT, a Qualified High Technology Business within the meaning of Hawaii Revised
Statutes, called for KPT to make a series of payments to the Company totaling $1,750,000 in exchange for the Company performing
research and development activities in Hawaii for the benefit of KPT (referred to herein as the KP Research). The KP Research
consisted of the initial phase of research, including the conduct of Phase II clinical trials in Hawaii for RP-G28. Pursuant to
the terms of the R&D Agreement, the Company maintained ownership of the results of the Company’s ongoing research related
to RP-G28, but KPT maintained ownership of the results of the KP Research. Inventions, developments and improvements arising out
of the KP Research were owned by KPT. Under the terms of the R&D Agreement, the Company would bear any costs involved in obtaining
patents for any inventions, developments or improvements resulting from the Research Project. In exchange for the irrevocable,
perpetual, exclusive, worldwide right and license to the results of the KP Research, as they are generated under this R&D
Agreement, the Company agreed to pay a quarterly royalty payment to KPT of $32,000 commencing March 31, 2015 and continuing through
December 31, 2035 or until such time as the KPM put or call option (as described below) was exercised. On March 26, 2015, the
Company exercised the KPM put option and issued 1,469,994 shares of Series B preferred stock to KPM, resulting in the full satisfaction
of the Company’s obligation to make royalty payments to KPT.
Option
Agreement
Pursuant
to the terms of the KPM Option Agreement, the Company had the right to put 1,469,994 shares of the Company’s Series B Preferred
Stock (“Series B”) to KPM and KPM had the option to call the same amount of shares of Series B from the Company at
any time after December 31, 2014. The number of shares was determined by dividing the $1,750,000 of payments made by KPT to the
Company under the R&D Agreement by the Series B original issue price of $1.19. Exercise of the put or call option would result
in full satisfaction of the Company’s obligation to make royalty payments to KPT under the R&D Agreement and KPT’s
right, title and interest in the research conducted pursuant to the R&D Agreement would become the property of the Company.
On March 26, 2015, the Company exercised its right to the KPM put option and issued 1,469,994 shares of Series B preferred stock
to KPM. Pursuant to the terms of the KPM Option Agreement, this resulted in the full satisfaction of the Company’s obligation
to make royalty payments to KPT under the R&D Agreement and also resulted in the termination of the R&D Agreement and
all of KPT’s right, title and interest in and to the KP Research, which rights now belong to the Company.
The
Company converted these shares into an aggregate of 205,593 shares of common stock upon the closing of the initial public offering.
NOTE
7 — WARRANTS
The
following represents a summary of the warrants outstanding at June 30, 2016 and changes during the period then ended:
|
|
|
|
|
Weighted Average
|
|
|
|
Warrants
|
|
|
Exercise Price
|
|
Outstanding at December 31, 2015
|
|
|
578,323
|
|
|
$
|
8.45
|
|
Granted
|
|
|
—
|
|
|
$
|
—
|
|
Exercised/Expired/Forfeited
|
|
|
—
|
|
|
$
|
—
|
|
Outstanding at June 30, 2016
|
|
|
578,323
|
|
|
$
|
8.45
|
|
Exercisable at June 30, 2016
|
|
|
578,323
|
|
|
$
|
8.45
|
|
NOTE
8 — STOCK-BASED COMPENSATION
Terms
of the Company’s share-based compensation are governed by the Company’s 2015 Equity Incentive Plan (the “2015
Plan”), 2009 Stock Plan and 2008 Stock Plan (collectively the “Plans”). The Plans permit the Company to grant
non-statutory stock options, incentive stock options and other equity awards to the Company’s employees, outside directors
and consultants; however, incentive stock options may only be granted to the Company’s employees. Beginning June 29, 2015,
no further awards may be granted under the 2009 Stock Plan or 2008 Stock Plan. However, to the extent awards under the 2008 Plan
or 2009 Plan are forfeited or lapse unexercised or are settled in cash, the common stock subject to such awards will be available
for future issuance under the 2015 Plan.
On
June 3, 2016, the stockholders of the Company approved an amendment to the 2015 Plan at the 2016 Annual Meeting of Stockholders,
which among other things, increased the number of shares that may be issued pursuant to awards under the 2015 Plan by 475,000
shares of common stock. As of June 30, 2016, the aggregate number of shares of common stock available for issuance under the 2015
Plan, as amended, was 635,448.
RITTER
PHARMACEUTICALS, INC.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
exercise price for options issued under the Plans is determined by the board of directors, but will be (i) in the case of an incentive
stock option (A) granted to an employee who, at the time of grant of such option, is a 10% stockholder, no less than 110% of the
fair market value per share on the date of grant; or (B) granted to any other employee, no less than 100% of the fair market value
per share on the date of grant; and (ii) in the case of a nonstatutory stock option, no less than 100% of the fair market value
per share on the date of grant. The options awarded under the 2015 Plan, as amended, will vest as determined by the board of directors
but will not exceed a ten-year period.
Options
Issued to Directors and Employees as Compensation
Pursuant
to the terms of the Plans, from inception to December 31, 2015, the Company issued options to purchase an aggregate of 2,026,712
shares to its executive officers and employees and non-employee directors for their services on the board of directors and its
committees. Of these, 124,064 options were expired or exercised and 1,902,648 options remain outstanding as of December 31, 2015.
The exercise prices of these option grants, as determined by the Company’s board of directors, range from $0.79 to $13.23
per share, and a portion of these vest subject to certain performance conditions.
During
the six months ended June 30, 2016, the Company granted an aggregate of 20,000 non-qualified 10-year term options to purchase
shares of the Company’s common stock to its employees. Of these, 10,000 options were forfeited and a total of 1,912,648
options issued to executive officers, non-executive employees and non-employee directors remain outstanding as of June 30, 2016.
The exercise prices of these option grants, as determined by the Company’s board of directors, range from $0.79 to $13.23
per share, and a portion of these vest subject to certain performance conditions.
The
Company recognized stock-based compensation expense for these services within general and administrative expense in the accompanying
unaudited condensed statements of operations of approximately $329,000 and $880,000 for the three months ended June 30, 2016 and
2015, respectively and $707,000 and $1.7 million for the six months ended June 30, 2016 and 2015, respectively. As of June 30,
2016, there was approximately $1.1 million of total unrecognized compensation cost related to unvested stock-based compensation
arrangements. This cost is expected to be recognized over a weighted average period of 1.2 years.
Options
Issued to Nonemployees for Services Received
The
Company has issued options to purchase an aggregate of 110,573 shares of the Company’s common stock since inception to December
31, 2015 to non-employee consultants under the Plans. Of these, 74,687 options were forfeited or exercised, and 35,886 options
remain outstanding as of December 31, 2015.
During
the six months ended June 30, 2016, the Company granted an aggregate of 7,000 non-qualified 10-year term options to purchase shares
of the Company’s common stock to its nonemployee contractors and 7,657 options were forfeited or exercised. As of June 30,
2016, a total of 35,229 options issued to nonemployees remain outstanding. The exercise prices of the outstanding options, as
determined by the Company’s board of directors, range from $0.72 to $2.25 per share. These outstanding options, with the
exception of an option to purchase an aggregate of 7,272 shares granted to a consultant, vest 25% upon the first anniversary of
the vesting commencement date with the remaining options vesting monthly in equal amounts over 36 months. The option granted to
the consultant in March 2011, vested 25% on the date of grant with the remaining shares vesting monthly in equal installments
over 36 months.
The
Company recognized stock-based compensation expense for these services of approximately $2,600 and $600 for the three months ended
June 30, 2016 and 2015, respectively, and approximately $2,700 and $700 for the six months ended June 30, 2016 and 2015, respectively,
within research and development expense in the accompanying unaudited condensed statements of operations.
Options
Valuation
The
Company calculates the fair value of stock-based compensation awards granted to employees and nonemployees using the Black-Scholes
option-pricing method. If the Company determines that other methods are more reasonable, or other methods for calculating these
assumptions are prescribed by regulators, the fair value calculated for the Company’s stock options could change significantly.
Higher volatility and longer expected lives would result in an increase to stock-based compensation expense to non-employees determined
at the date of grant.
Stock-based
compensation expense to non-employees affects the Company’s general and administrative expenses and research and development
expenses.
RITTER
PHARMACEUTICALS, INC.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
fair value of each stock option granted has been determined using the Black-Scholes option-pricing model. The material factors
incorporated in the Black-Scholes model in estimating the fair value of the options granted for the periods presented were as
follows:
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Expected dividend yield
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
Expected stock price volatility
|
|
|
54.75%
- 56.33
|
%
|
|
|
65.06%
- 67.08
|
%
|
|
|
54.75%
- 59.03
|
%
|
|
|
51.45%
- 67.08
|
%
|
Risk-free interest rate
|
|
|
1.29%
- 1.66
|
%
|
|
|
1.79%
- 2.07
|
%
|
|
|
1.29%
- 1.78
|
%
|
|
|
0.77%
- 2.07
|
%
|
Term of options
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
Stock price
|
|
|
$1.53
- $1.65
|
|
|
|
$5.86
|
|
|
|
$1.13
- $1.65
|
|
|
|
$5.86
|
|
|
●
|
Expected
dividend yield.
The expected dividend is assumed to be zero as the Company has never paid dividends and has no current
plans to pay any dividends on the Company’s common stock.
|
|
|
|
|
●
|
Expected
stock-price volatility.
As the Company’s common stock only recently became publicly traded, the expected volatility
is derived from the average historical volatilities of publicly traded companies within the Company’s industry that
the Company considers to be comparable to the Company’s business over a period approximately equal to the expected term.
|
|
|
|
|
●
|
Risk-free
interest rate.
The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero
coupon U.S. Treasury notes with maturities approximately equal to the expected term.
|
|
|
|
|
●
|
Expected
term.
The expected term represents the period that the stock-based awards are expected to be outstanding. The Company’s
historical share option exercise experience does not provide a reasonable basis upon which to estimate an expected term because
of a lack of sufficient data. Therefore, the Company estimates the expected term by using the simplified method provided by
the SEC. The simplified method calculates the expected term as the average of the time-to-vesting and the contractual life
of the options.
|
In
addition to the assumptions used in the Black-Scholes option-pricing model, the Company also estimates a forfeiture rate to calculate
the stock-based compensation for the Company’s equity awards. The Company will continue to use judgment in evaluating the
expected volatility, expected terms and forfeiture rates utilized for the Company’s stock-based compensation calculations
on a prospective basis.
Management
estimated the implied market value of invested capital of the Company by backsolving for the purchase price of the Company’s
preferred shares for one common share through the option-pricing method. The premise of this method is that the transaction implied
a market price for a share which in turn implied values for the other classes of equity based on relative claims on equity value,
such as liquidation preferences and conversion rights. The application of the backsolve method considering the Company’s
capital structure yielded a total market value of invested capital of approximately $15.5 million, $14.4 million, and $8.9 million,
of which approximately $819,000, $870,000, and $670,000 were allocated to the total value of common stock as of the Company’s
three valuation dates of November 7, 2013, July 31, 2012, and December 31, 2010, respectively.
On
the three valuation dates of November 7, 2013, July 31, 2012, and December 31, 2010, after estimating the market value of invested
capital, the Company allocated it to the various equity classes comprising the subject company’s capitalization table. This
process ultimately results in creating a final estimate of value for the subject company’s underlying equity interests.
While there are many different value allocation methods, these various methods can be grouped into three general categories as
defined by the AICPA Guide, one of which is the Option-Pricing Method (OPM).
The
Company used the OPM to allocate market value of invested capital to the various equity classes and debt comprising the Company’s
capitalization structure. The Company chose the OPM over other acceptable methods due to the complex capital structure, the uncertainty
related to market conditions, and the lack of visibility on an imminent exit event. Under the OPM, each equity class is modeled
as a call option with a distinct claim on the equity of the Company. The option’s exercise price is based on the Company’s
total equity value available for each participating equity holder. The characteristics of each equity class determine the equity
class’ claim on the total equity value. By constructing a series of options in which the exercise price is set at incremental
levels of value, which correspond to the equity value necessary for each level of equity to participate, the Company determined
the incremental option value of each series. When multiplied by the percentage of ownership of each equity class participating
under that series, the result is the incremental value allocated to each class under that series.
RITTER
PHARMACEUTICALS, INC.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
OPM relies on the Black-Scholes option-pricing model to value the call options on the Company’s invested capital. The following
inputs were applied in the Black-Scholes calculations of the OPM:
|
|
Valuation Dates
|
|
|
|
November 7, 2013
|
|
|
July 31, 2012
|
|
|
December 31, 2010
|
|
Risk-free rate
|
|
|
0.55
|
%
|
|
|
0.57
|
%
|
|
|
2.01
|
%
|
Maturity (years)
|
|
|
3.00
|
|
|
|
4.00
|
|
|
|
5.00
|
|
Volatility
|
|
|
58.00
|
%
|
|
|
61.00
|
%
|
|
|
61.00
|
%
|
Discounts
ranging from 35.8% to 40% were applied for lack of control and lack of marketability for the common stock. The calculation resulted
in a fair value for the common stock of $1.17, $1.19, and $1.03 per share as of the Company’s three valuation dates
of November 7, 2013, July 31, 2012, and December 31, 2010, respectively.
For
options issued in 2014, given the Company’s distinct possible exit scenarios of an initial public offering, the Company
used the probability weighted expected return method (PWERM) to estimate the fair value of the Company’s common equity.
Under this method, an analysis of future values of a company is performed for several likely liquidity scenarios. The value of
the common stock is determined for each scenario at the time of each future liquidity event and discounted back to the present
using a risk-adjusted discount rate. The present values of the common stock under each scenario are then weighted based on the
probability of each scenario occurring to determine the value for the common stock. The Company’s management determined
the probability weighting of potential liquidity events to be 45% for an initial public offering and 55% for other scenarios,
which represents all other likely outcomes for the Company.
Management
estimated the implied market value of invested capital of the Company by backsolving for the purchase price of the Company’s
preferred shares for one common share through the use of OPM. The application of the backsolve method considering the capital
structure yielded a total market value of invested capital of approximately $25.2 million, of which approximately $1.4 million
was allocated to the total value of common stock as of the Company’s valuation date of October 31, 2014.
Given
the lack of marketability for the common stock, the Company applied a discount of 21.4% for using the average strike put option
approach. This resulted in a probability weighted common share value, after adjustment, of $5.86 per share as of valuation
date of October 31, 2014.
Stock-based
Compensation Summary Tables
Information
regarding the Company’s stock option grants to the Company’s employees and non-employees, along with the estimated
fair value per share of the underlying common stock, for stock options granted since 2005 is summarized as follows:
Grant Date
|
|
Number of Common
Shares Underlying
Options Granted
|
|
|
Exercise Price per
Common Share
|
|
|
Estimated Fair
Value per Share of
Common Stock
|
|
|
Intrinsic
Value
Per
Option
|
|
2005
|
|
|
58,321
|
|
|
$
|
0.07
|
|
|
$
|
1.79
|
|
|
$
|
1.72
|
|
2009
|
|
|
60,559
|
|
|
$
|
0.72
- $0.79
|
|
|
$
|
4.43
|
|
|
$
|
3.71
- $3.64
|
|
2011
|
|
|
33,846
|
|
|
$
|
1.03
|
|
|
$
|
1.00
|
|
|
$
|
0.00
|
|
2012
|
|
|
60,019
|
|
|
$
|
1.14
|
|
|
$
|
1.14
|
|
|
$
|
0.00
|
|
2013
|
|
|
100,000
|
|
|
$
|
1.14
- $1.30
|
|
|
$
|
1.14
|
|
|
$
|
0.00
|
|
2014
|
|
|
1,626,740
|
|
|
$
|
5.86
- $13.23
|
|
|
$
|
5.86
|
|
|
$
|
0.00
|
|
2015
|
|
|
34,000
|
|
|
$
|
2.25
|
|
|
$
|
2.25
|
|
|
$
|
0.00
|
|
2016
|
|
|
27,000
|
|
|
$
|
1.39
|
|
|
$
|
1.39
|
|
|
$
|
1.13
- $1.53
|
|
RITTER
PHARMACEUTICALS, INC.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
The
following represents a summary of the options granted to employees and non-employees that are outstanding at June 30, 2016 and
changes during the period then ended:
|
|
Options
|
|
|
Weighted Average
Exercise Price
|
|
Outstanding at December 31, 2015
|
|
|
1,938,534
|
|
|
$
|
7.081
|
|
Granted
|
|
|
27,000
|
|
|
|
1.390
|
|
Exercised/Expired/Forfeited
|
|
|
(17,657
|
)
|
|
|
(1.390
|
)
|
Outstanding at June 30, 2016
|
|
|
1,947,877
|
|
|
$
|
7.054
|
|
Exercisable at June 30, 2016
|
|
|
877,428
|
|
|
$
|
5.413
|
|
Expected to be vested
|
|
|
1,070,449
|
|
|
$
|
8.400
|
|