Quarterly report pursuant to Section 13 or 15(d)

Share Based Compensation

v3.7.0.1
Share Based Compensation
9 Months Ended
Jul. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Share Based Compensation

8. SHARE BASED COMPENSATION

 

Restricted Stock Units (RSUs)

 

A summary of the Company’s RSU activity and related information for the nine months ended July 31, 2017 is as follows:

 

    Number of     Weighted-Average  
    RSUs     Grant Date Fair Value  
Balance at October 31, 2016:     719,448     $ 10.77  
Granted     1,579,934     $ 7.95  
Vested     (722,089 )   $ 9.03  
Cancelled     (49,600 )   $ 8.89  
Balance at July 31, 2017     1,527,693     $ 8.73  

 

As of July 31, 2017, there was approximately $11,266,000 of unrecognized compensation cost related to non-vested RSUs, which is expected to be recognized over a remaining weighted average vesting period of approximately 2.18 years.

 

As of July 31, 2017, the aggregate intrinsic value of non-vested RSUs was approximately $9,884,000.

  

Employee Stock Awards

 

Common Stock issued to executives and employees related to vested incentive retention awards, employment inducements, management purchases and employee excellence awards totaled 463,985 shares (452,084 shares on a net basis after employee taxes) and 152,056 shares (149,833 shares on a net basis after employee taxes) for the three months ended July 31, 2017 and 2016, respectively. Total stock compensation expense associated with these awards for the three months ended July 31, 2017 and 2016 was $4,259,656 and $1,220,832 respectively.

 

Common Stock issued to executives and employees related to vested incentive retention awards, employment inducements, management purchases and employee excellence awards totaled 717,505 shares (674,543 shares on a net basis after employee taxes) and 539,512 shares (532,933 shares on a net basis after employee taxes) during the nine months ended July 31, 2017 and 2016, respectively. Total stock compensation expense associated with these awards for the nine months ended July 31, 2017 and 2016 was $7,328,591 and $4,075,393, respectively.

 

Furthermore, employees were entitled to receive a performance-based year-end cash bonus. Several employees voluntarily requested to be paid all or a portion of their cash bonus in the Company’s Common Stock instead of cash. During the nine months ended July 31, 2016, the total fair value of these equity purchases were $102,022, or 9,150 shares of the Company’s Common Stock.

 

Director Stock Awards

 

Common stock issued to Directors for compensation related to board and committee membership totaled 0 shares and 31,767 shares for the three months ended July 31, 2017 and 2016, respectively. Total Director stock compensation expense for the three months ended July 31, 2017 and 2016 was $101,628 and $311,205, respectively.

 

Common stock issued to Directors for compensation related to board and committee membership totaled 30,000 and 125,501 shares for the nine months ended July 31, 2017 and 2016, respectively. Total Director stock compensation expense for the nine months ended July 31, 2017 and 2016 was $301,572 and $933,615, respectively.

 

Stock Options

 

A summary of changes in the stock option plan for the nine months ended July 31, 2017 is as follows:

 

    Number of     Weighted-Average  
    Options     Exercise Price  
Outstanding at October 31, 2016:     3,351,795     $ 13.31  
Granted     556,952     $ 7.71  
Exercised     -     $ -  
Cancelled     (4,000 )   $ 3.42  
Expired     (11,189 )   $ 17.88  
Outstanding at July 31, 2017     3,893,558     $ 12.51  
Vested and Exercisable at July 31, 2017     2,795,826     $ 13.05  

 

Total compensation cost related to the Company’s outstanding stock options, recognized in the statement of operations for the three months ended July 31, 2017 and 2016, was approximately $9,698,000 and $3,108,000, respectively. For the nine months ended July 31, 2017 and 2016, compensation cost related to the Company’s outstanding stock options was approximately $15,889,000 and $13,060,000, respectively.

 

During the nine months ended July 31, 2017, 556,952 options were granted with a total grant date fair value of approximately $3,542,000. During the nine months ended July 31, 2016, 1,385,000 options were granted with a total grant date fair value of approximately $14,838,000.

 

As of July 31, 2017, there was approximately $6,342,000 of unrecognized compensation cost related to non-vested stock option awards, which is expected to be recognized over a remaining weighted average vesting period of approximately 1.29 years.

 

As of July 31, 2017, the aggregate intrinsic value of vested and exercisable options was approximately $27,000.

 

In determining the fair value of the stock options granted during the nine months ended July 31, 2017 and 2016, the Company used the following inputs in its BSM:

 

    Nine Months Ended  
    July 31, 2017     July 31, 2016  
Expected Term     5.50-6.50 years       5.51-6.51 years  
Expected Volatility     107.07%-110.93 %     109.23%-115.25 %
Expected Dividends     0 %     0 %
Risk Free Interest Rate     1.26%-1.58 %     1.65%-2.00 %

  

Shares Issued to Consultants

 

During the three months ended July 31, 2017, 48,737 shares of Common Stock valued at $416,000 were issued to consultants for services, of which $247,100 represented shares issued for amounts previously accrued. The Company recorded a liability on its balance sheet for $141,800 for shares earned pursuant to consulting agreements but not delivered. During the three months ended July 31, 2016, 31,030 shares of Common Stock valued at $252,000 were issued to consultants for services. The common stock share values were based on the dates the shares vested.

 

During the nine months ended July 31, 2017, 125,549 shares of Common Stock valued at $1,108,950 were issued to consultants for services, of which $75,000 represented shares issued for amounts previously accrued. The Company recorded a liability on its balance sheet for $141,800 for shares earned pursuant to consulting agreements but not delivered. During the nine months ended July 31, 2016, 120,047 shares of Common Stock valued at $1,097,088 were issued to consultants for services. The common stock share values were based on the dates the shares vested.

 

The following table summarizes share-based compensation expense included in the Statement of Operations by expense category for the three and nine months ended July 31, 2017 and 2016, respectively:

 

    Three Months Ended July 31,     Nine Months Ended July 31,  
    2017     2016     2017     2016  
Research and development   $ 1,517,585     $ 1,014,034     $ 4,271,073     $ 7,088,377  
General and administrative     12,852,729       3,994,331       20,423,391       12,281,571  
Total   $ 14,370,314     $ 5,008,365     $ 24,694,464     $ 19,369,948