Stock Options and Warrants
|9 Months Ended|
Feb. 28, 2014
|Stock Options and Warrants||
Note 5 - Stock Options and Warrants
The Company has one active stock-based equity plan at February 28, 2014. Pursuant to the 2004 Stock Incentive Plan, as amended, which was approved by the Company’s shareholders in 2005, the Company was authorized to grant options to purchase up to 7,600,000 shares of the Company’s common stock. On December 12, 2012, the Company’s shareholders approved, at its annual meeting, the CytoDyn Inc. 2012 Equity Incentive Plan (the “2012 Plan”), which replaced the 2004 Stock Incentive Plan and provides for the issuance of up to 3,000,000 shares of common stock pursuant to various forms of incentive awards allowed under the 2012 Plan. As of February 28, 2014 the Company had 1,538,903 shares available for future stock-based grants under the 2012 Plan.
During the nine months ended February 28, 2014, the Company granted options to purchase a total of 299,452 shares of common stock to directors and an employee with exercise prices ranging from $.80 to $1.09 per share. The director option awards vest at 25% per quarter over one year and the employee award vests one-third annually with a five year term. The weighted average grant date fair value related to these options was $.49 per share.
During the nine months ended February 28, 2014, the Company granted options to purchase 305,000 shares of common stock to a consultant with an exercise price of $.75 per share and a grant-date fair value of $.43 per share. The options, which will terminate on September 4, 2018, vested as to 50,000 shares on the date of issuance and will vest at the monthly rate of 15,000 shares for each month during which the consulting agreement is in place. The consulting agreement, which has a term of 18 months, may be terminated for any reason after six months (See Note 10).
During the nine months ended February 28, 2014, the holder of a warrant covering 50,000 shares exercised the right to purchase such shares at $1.00 per share. Cash proceeds from the exercise of warrants were $50,000 and $192,500 for the nine months ended February 28, 2014 and 2013.
During the nine months ended February 28, 2014, the Company issued a warrant to purchase 50,000 shares of common stock at a purchase price of $.75 per share and with a term expiring November 1, 2016 in settlement of a claim for telecommunications services provided to the Company in the fall of 2012.
During the nine months ended February 28, 2014 the Company issued 11,153,850 common stock warrants to investors in the Company’s $14.5 million private equity offering (see Note 6). Investors in the offering purchased Units at $1.30 per Unit, consisting of two shares of common stock plus a warrant to purchase one share of common stock. Each Unit warrant has an exercise price of $.75 per share and a five-year term. In connection with this private placement and pursuant to the Placement Agent Agreement dated June 1, 2013 as amended, the Company issued to its Placement Agent, as additional compensation, a warrant covering 4,940,092 common shares with an exercise price of $.75 per share and a seven-year term. The warrants vest immediately, and had a grant-date fair value of $1.03 per share. The fair value of the warrants was included as a component of equity, increasing and decreasing equity for the fair value of the warrants.
Compensation expense related to stock options and warrants issued as compensation was approximately $298,000 and $784,400 and $473,000 and $2,827,000 for the three and nine months ended February 28, 2014 and February 28, 2013, respectively. The grant date fair value of options and warrants vested during the three and nine month periods ended February 28, 2014 and February 28, 2013 was approximately $417,000 and $1,991,400, and $378,000 and $8,773,000, respectively. As of February 28, 2014, there was approximately $1,390,200 of unrecognized compensation expense related to share-based payments for unvested options, which is expected to be recognized over a weighted average period of 1.98 years.
The following table represents stock option and warrant activity as of and for the nine months ended February 28, 2014:
The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.
Reference 1: http://www.xbrl.org/2003/role/presentationRef