Equity Instruments | 6 Months Ended |
Jun. 30, 2014 |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' |
Equity Instruments | ' |
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Note 8 – Equity Instruments |
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Options |
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Ampio adopted a stock plan in March 2010. The number of shares of common stock reserved for issuance to officers, directors, employees and consultants through various means, including incentive stock options, non-qualified stock options, restricted stock grants, and other forms of equity equivalents is currently 11,700,000 shares. |
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Ampio has computed the fair value of all options granted using the Black-Scholes option pricing model. In order to calculate the fair value of the options, certain assumptions are made regarding components of the model, including the estimated fair value of the underlying common stock, risk-free interest rate, volatility, expected dividend yield and expected option life. Changes to the assumptions could cause significant adjustments to valuation. Ampio estimated a volatility factor utilizing a weighted average of comparable published volatilities of peer companies. Ampio has estimated a forfeiture rate of zero as the effect of forfeitures has not been significant and the small number of option holders does not provide a reasonable basis for prediction. Ampio estimates the expected term based on the average of the vesting term and the contractual term of the options. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of the grant for treasury securities of similar maturity. Ampio has computed the fair value of all options granted during the six months ended June 30, 2014 using the following assumptions: |
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Expected volatility | | 72% - 85% | | | | | | | | | | | | | | |
Risk free interest rate | | 1.51% - 2.27% | | | | | | | | | | | | | | |
Expected term (years) | | 5.0 - 7.0 | | | | | | | | | | | | | | |
Dividend yield | | 0% | | | | | | | | | | | | | | |
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Ampio stock option activity is as follows: |
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| | Number of | | | Weighted | | | Weighted Average | | | Aggregate Fair | |
Options | Average | Remaining | Value |
| Exercise Price | Contractual Life | |
Outstanding December 31, 2013 | | | 5,135,058 | | | $ | 3.54 | | | | 8.74 | | | $ | 10,273,070 | |
Granted | | | 570,000 | | | $ | 7.21 | | | | | | | | | |
Exercised | | | (107,504 | ) | | $ | 1.57 | | | | | | | | | |
Forfeited/Cancelled | | | (34,792 | ) | | $ | 3.42 | | | | | | | | | |
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Outstanding June 30, 2014 | | | 5,562,762 | | | $ | 3.62 | | | | 7.74 | | | $ | 12,411,628 | |
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Exercisable at June 30, 2014 | | | 4,070,518 | | | $ | 2.91 | | | | 7.32 | | | $ | 7,292,070 | |
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Available for grant at June 30, 2014 | | | 4,796,092 | | | | | | | | | | | | | |
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Pursuant to the Luoxis 2013 Stock Option Plan (the “2013 Plan”), 5,000,000 shares of its common stock were reserved for issuance under the 2013 Plan. On June 15, 2013, Luoxis granted 1,800,000 shares to officers, employees and consultants. The shares have an exercise price of $1.00 which is the same as the private placement offering price. Twenty-five percent of the shares vested immediately and the remainder vest annually on the grant date at a rate of 25% over the next three years. The fair value of these options totaling $1,272,366 were also calculated using the Black-Scholes option pricing model utilizing the same methodology as described above for Ampio. During the first quarter of 2014, Luoxis granted 150,000 options to officers and consultants. The options have an exercise price of $1.00 and the same vesting schedule as those granted on June 15, 2013. The fair value of these options totaling $101,242 were also calculated using the Black-Scholes option pricing model utilizing the same methodology as described above for Ampio including the following assumptions: |
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Expected volatility | | 79% - 82% | | | | | | | | | | | | | | |
Risk free interest rate | | 0.75% - 1.38% | | | | | | | | | | | | | | |
Expected term (years) | | 5.0 - 6.5 | | | | | | | | | | | | | | |
Dividend yield | | 0% | | | | | | | | | | | | | | |
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Luoxis stock option activity is as follows: |
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| | Number of | | | Exercise Price | | | Weighted Average | | | Aggregate Fair | |
Options | Remaining | Value |
| Contractual Life | |
Outstanding December 31, 2013 | | | 1,800,000 | | | $ | 1 | | | | 9.72 | | | $ | 1,272,366 | |
Granted | | | 150,000 | | | $ | 1 | | | | | | | | | |
Exercised | | | — | | | $ | — | | | | | | | | | |
Forfeited/Cancelled | | | — | | | $ | — | | | | | | | | | |
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Outstanding June 30, 2014 | | | 1,950,000 | | | $ | 1 | | | | 9.01 | | | $ | 1,373,607 | |
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Exercisable at June 30, 2014 | | | 937,500 | | | $ | 1 | | | | 8.98 | | | $ | 661,493 | |
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Available for grant at June 30, 2014 | | | 3,050,000 | | | | | | | | | | | | | |
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Vyrix has also adopted a 2013 Stock Option Plan (the “Vyrix 2013 Plan”) which reserved 5,000,000 shares of its common stock for issuance to officers, employees and consultants. As of June 30, 2014, 950,000 shares had been granted to a director, officers and consultants. Twenty-five percent or 237,500 shares vested immediately and the remainder vest annually over three years. On November 18, 2013, 500,000 of these shares were granted to the Vyrix Chief Executive Officer and the exercise price was to be based upon a future private equity offering. Management estimated a price of $1.75 per common share for valuing the option grant. The grant was valued utilizing the Black-Scholes option pricing model using the same methodology as described above for Ampio. The valuation resulted in a charge of $140,070 in the fourth quarter of 2013. In the first quarter of 2014, Vyrix engaged an independent third party consulting firm to perform a valuation which was completed and the stock price was set at $0.70 per share. All 950,000 options have been valued utilizing the $0.70 per share. As a result of the previous charge in the fourth quarter of 2013 and the revision of the exercise price, a reduction of stock compensation expense of $84,041 was reflected in the first quarter of 2014. Assumptions are as follows: |
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Expected volatility | | 63% - 76% | | | | | | | | | | | | | | |
Risk free interest rate | | 0.90% - 2.02% | | | | | | | | | | | | | | |
Expected term (years) | | 5.0 - 6.5 | | | | | | | | | | | | | | |
Dividend yield | | 0% | | | | | | | | | | | | | | |
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Vyrix stock option activity is as follows: |
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| | Number of | | | Exercise Price | | | Weighted Average | | | Aggregate Fair | |
Options | Remaining | Value |
| Contractual Life | |
Outstanding December 31, 2013 | | | 500,000 | | | $ | 1.75 | | | | 9.94 | | | $ | 557,134 | |
Granted | | | 450,000 | | | $ | 0.7 | | | | | | | | | |
Exercised | | | — | | | $ | — | | | | | | | | | |
Forfeited/Cancelled | | | — | | | $ | — | | | | | | | | | |
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Outstanding June 30, 2014 | | | 950,000 | | | $ | 0.7 | | | | 9.54 | | | $ | 416,369 | |
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Exercisable at June 30, 2014 | | | 237,500 | | | $ | 0.7 | | | | 9.54 | | | $ | 104,092 | |
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Available for grant at June 30, 2014 | | | 4,050,000 | | | | | | | | | | | | | |
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Stock-based compensation expense related to the fair value of stock options was included in the consolidated statements of operations as research and development expenses and general and administrative expenses as set forth in the table below. Ampio and its subsidiaries determined the fair value as of the date of grant using the Black-Scholes option pricing model and expenses the fair value ratably over the vesting period. |
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The following table summarizes stock-based compensation expense for the three and six months ended June 30, 2014 and 2013: |
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| | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | 2014 | | | 2013 | | | 2014 | | | 2013 | |
Research and development expenses | | | | | | | | | | | | | | | | |
Stock options | | | | | | | | | | | | | | | | |
Ampio | | $ | 399,266 | | | $ | 223,680 | | | $ | 1,037,698 | | | $ | 378,371 | |
Luoxis | | | 51,584 | | | | 202,495 | | | | 103,168 | | | | 202,495 | |
Vyrix | | | 8,454 | | | | — | | | | 37,605 | | | | — | |
General and administrative expenses | | | | | | | | | | | | | | | | |
Common stock issued for services | | | — | | | | — | | | | 30,000 | | | | 88,050 | |
Stock options | | | | | | | | | | | | | | | | |
Ampio | | | 1,092,060 | | | | 231,695 | | | | 1,391,067 | | | | 675,483 | |
Luoxis | | | 35,576 | | | | 114,454 | | | | 93,591 | | | | 114,454 | |
Vyrix | | | 18,734 | | | | — | | | | (36,224 | ) | | | — | |
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| | $ | 1,605,674 | | | $ | 772,324 | | | $ | 2,656,905 | | | $ | 1,458,853 | |
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Unrecognized expense at June 30, 2014 | | | | | | | | | | | | | | | | |
Ampio | | $ | 4,102,852 | | | | | | | | | | | | | |
Luoxis | | $ | 698,425 | | | | | | | | | | | | | |
Vyrix | | $ | 275,193 | | | | | | | | | | | | | |
Weighted average remaining years to vest | | | | | | | | | | | | | | | | |
Ampio | | | 1.33 | | | | | | | | | | | | | |
Luoxis | | | 2.03 | | | | | | | | | | | | | |
Vyrix | | | 2.54 | | | | | | | | | | | | | |
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Warrants |
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Ampio issued warrants in conjunction with its Senior Convertible Debentures, 2011 Private Placements and an underwritten public offering. A summary of all Ampio warrants is as follows: |
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| | Number of | | | Weighted | | | Weighted Average | | | | | |
Warrants | Average | Remaining | | | | |
| Exercise Price | Contractual Life | | | | |
Outstanding December 31, 2013 | | | 527,690 | | | $ | 2.93 | | | | 2.44 | | | | | |
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Warrants exercised - Private/Registered Direct Placements | | | (11,261 | ) | | $ | (3.13 | ) | | | | | | | | |
Warrants exercised - Private/Registered Direct Placements | | | (100 | ) | | $ | (4.06 | ) | | | | | | | | |
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Outstanding June 30, 2014 | | | 516,329 | | | $ | 3.26 | | | | 1.94 | | | | | |
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The exercise price of the warrants associated with the Senior Convertible Debentures was fixed at $1.75 per share and the warrants expired on December 31, 2013. All of the warrants were exercised prior to expiration. Warrants issued in connection with the 2011 Private Placements are at $3.125 per share and expire March 31, 2016. |
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In connection with the final closing of the Luoxis private placement in May 2013, Luoxis issued warrants to purchase 465,250 shares of common stock at a price of $1.00 exercisable one year after the final closing. The weighted average remaining contractual life is 3.92 years. These warrants were valued using the Black-Scholes option pricing model. In order to calculate the fair value of the warrants, certain assumptions were made regarding components of the model, including the closing price of the underlying common stock, risk-free interest rate, volatility, expected dividend yield, and expected life. Changes to the assumptions could cause significant adjustments to valuation. The Company estimated a volatility factor utilizing a weighted average of comparable published volatilities of peer companies. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of the grant for treasury securities of similar maturity. The offering costs and the additional paid-in capital for the warrants associated with the common stock offering was valued at $313,064 using the Black-Scholes valuation methodology because that model embodies all of the relevant assumptions that address the features underlying these instruments. Significant assumptions in valuing the Luoxis warrants were as follows: |
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Expected volatility | | | 87 | % | | | | | | | | | | | | |
Risk free interest rate | | | 0.52 | % | | | | | | | | | | | | |
Expected term (years) | | | 5 | | | | | | | | | | | | | |
Dividend yield | | | 0 | % | | | | | | | | | | | | |