INHIBITOR THERAPEUTICS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019
(Unaudited)
3.
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Summary of Significant Accounting Policies (continued):
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Income Taxes
Deferred tax assets and liabilities are recognized for future tax consequences attributed to differences between the consolidated financial
statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that are expected to apply to the differences in the periods that they are expected to reverse. These differences
occur primarily in share-based compensation.
Recent accounting pronouncements:
Management has considered all recent accounting pronouncements issued, but not effective, and does not believe that they will have a material
impact on the Companys financial statements.
Employee Stock Plans
On
March 20, 2020, members of the Companys Board of Directors were awarded 4.5 million stock options pursuant to the 2014 Equity Incentive Plan (the EIP) with an exercise price of $0.05 and a Black-Scholes value of $0.038
that vest on the first anniversary of the grant date. The grant date fair value of common stock options was determined using the Black-Scholes model on the date of issuance and the number of shares expected to vest. The total Black-Scholes value of
the March 20, 2020 stock options grants was approximately $0.2 million.
On February 3, 2019, members of the Companys
Board of Directors were awarded approximately 3.0 million stock options pursuant to the EIP with an exercise price of $0.076 and Black-Scholes value of $0.054 that vest on the first anniversary of the grant date. The grant date fair value of
common stock options was determined using the Black-Scholes model on the date of issuance and the number of shares expected to vest. The total Black-Scholes value of the February 3, 2019 stock options grants was approximately $0.2 million.
On December 12, 2019, a new member of the Companys Board of Directors was awarded 210,000 stock options pursuant to the EIP
with an exercise price of $0.05 and Black-Scholes value of $0.029 that vested on February 3, 2020. The grant date fair value of common stock options was determined using the Black-Scholes model on the date of issuance and the number of shares
expected to vest. The total Black-Scholes value of the December 12, 2019 stock options grant was approximately $6,090.
Total
stock-based compensation for the three months ended March 31, 2020 was approximately $0.02 million and is related to common stock options issued pursuant to the EIP in 2019 and 2020 as mentioned above. The expense is classified as general
and administrative expense in the accompanying condensed statements of operations. As of March 31, 2020, there were 9,502,685 outstanding common stock options under the EIP of which 5,002,685 were vested. There was approximately
$0.2 million in unamortized stock-based compensation at March 31, 2020.
The Company may from time to time become a party to various legal proceedings arising in the ordinary course of business. Except as discussed
below, the Company is not the subject of any pending legal proceedings.
On July 9, 2019, Hedgepath, LLC (HPLLC), a
significant minority stockholder of the Company and an investment vehicle associated with the Companys former Executive Chairman, filed a civil action captioned Hedgepath, LLC v. Magrab, et al., Civil Action Number 2019-0529-JTL, in the Delaware Court of Chancery (the Action) against the Companys directors and President and Chief Executive Officer, and a former director (collectively the
Individual Defendants). On September 27, 2019, the Individual Defendants and Mayne Pharma each filed a motion to dismiss the Action.
On December 3, 2019, HPLLC filed the Verified Amended and Supplemental Complaint. In the Complaint in the Action, purportedly brought
directly and derivatively on behalf of the Company, HPLLC alleges claims for breach of fiduciary duty, declaratory judgement, and dilution of stockholder equity, against the Individual Defendants and Mayne Pharma in connection with (i) the
previously announced issuance of certain Company equity securities to Mayne Pharma on or about January 8, 2018, (ii) Mayne Pharmas alleged influence over the timing and conduct of the previous clinical trial of SUBA-Itraconazole for the
treatment of BCCNS, and (iii) previously announced amendments to the Supply and License Agreement, as amended (presently memorialized at the Third Amended SLA), between the Company and Mayne Pharma and certain transactions contemplated thereby.
The Complaint also alleges claims for breach of fiduciary duty and fraudulent misrepresentation in connection with allegedly false and misleading statements included in Company press releases and filings with the SEC. The Complaint seeks unspecified
damages, equitable and other relief from the defendants. The Companys director and officer insurance has
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