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S-1
PROTEON THERAPEUTICS INC filed this Form S-1 on 09/16/2014
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Proteon Therapeutics, Inc.

Notes to Financial Statements (Continued)

11. Stock-based Compensation (Continued)

        The total intrinsic value of options exercised in the years ended December 31, 2012 and 2013 and six months ended June 30, 2013 and 2014 (unaudited), was $0, $0.1 million, $0 and $2,000, respectively. As of June 30, 2014 (unaudited), there was $1.7 million of total unrecognized compensation cost related to employee non-vested stock options granted under the Plan. As of June 30, 2014 (unaudited), the unrecognized compensation cost related to non-employee, non-vested stock options granted under the plan was $3,000.

        The total unrecognized compensation cost for employee and non-employee awards will be adjusted for future forfeitures. The Company expects to recognize that cost over a remaining weighted-average period of four years.

        During 2013, the Company modified the stock option awards of one employee upon the employee's termination. In accordance with ASC 718, the Company assessed the fair value of the unvested portion of the modified awards at $0.1 million, and recorded the amount as compensation cost on the date of termination.

        The Company estimates the fair value of each employee stock award on the grant date using the Black-Scholes option-pricing model based on the following assumptions regarding the fair value of the underlying Common Stock on each measurement date:

 
   
  Six Months Ended
June 30,
 
  Year Ended
December 31,
2013
 
  2013   2014

Weighted average expected volatility

    91.12 %   91.1 % 80.7% - 81.5%

Expected term (in years)

    5.95     5.95   5.71 - 6.11

Risk free interest rate

    1.03 %   1.03 % 1.87% - 1.97%

Expected dividend yield

    0 %   0 % 0%

12. 401(k) Savings Plan

        In October 2007, the Company adopted a tax-qualified employee savings and retirement 401(k) Plan, covering all qualified employees. Participants may elect a salary deferral of at least 1% as a contribution to the 401(k) Plan, up to the statutorily prescribed annual limit for tax-deferred contributions. The Company may elect to make a safe harbor contribution to the Plan equal to 3% of each eligible employee's salary. Safe harbor contributions are fully vested to plan participants at all times. The Company had no safe harbor contributions for the years ended 2012 and 2013 and the six months ended June 30, 2014 (unaudited).

13. Income Taxes

        For the years ended December 31, 2012 and 2013, the six months ended June 30, 2013 and 2014 (unaudited) the Company has not recorded a provision for federal or state income taxes as it has had cumulative net operation losses since inception. The Company's losses before income taxes consist solely of domestic losses.

F-29