In addition, the European authorities approved a research grant under the FP7 in the amount of approximately
We believe that we have sufficient cash to fund our operations for at least the next 12 months.
Application of Critical Accounting Policies
Our significant accounting policies are more fully described in Note 2 to our consolidated financial statements appearing in this Annual Report on Form 10-K. We believe that the accounting policies below are critical for one to fully understand and evaluate our financial condition and results of operations. The discussion and analysis of our financial condition and results of operations is based on our financial statements, which we prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate such estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
Revenue Recognition from the United Agreement
We recognize revenue pursuant to the United Agreement in accordance with ASC 605-25, "Revenue Recognition, Multiple-Element Arrangements".
Revenues from the non-refundable upfront license fee of
$5,000,000are recognized on a straight line basis over the estimated development period, resulting in revenues of $679,000for the year ended June 30, 2013, in accordance with SAB104 "Revenue Recognition". The development period for the United project is estimated using the current project progress and future expected timeline of clinical trials in PAH. In June 2013, we assessed the impact of the Clinical Hold on the performance period of the United Agreement and concluded that it should be extended from 6.5 years to 11.5 years. The remaining performance period is 9.5 years as of June 30, 2013. This change in estimate resulted in a decrease in future annual revenues from $779,000to $379,000. 27 -------------------------------------------------------------------------------- We also received a refundable, advance payment on the development, of $2,000,000that is deductible against development expenses as it accrued in accordance with ASC 730-20. As of June 30, 2013, we deducted an amount of approximately $1,607,244.
Stock-based compensation is considered critical accounting policy due to the significant expenses of restricted stock units which were granted to our employees, directors and consultants. In fiscal year 2013 we recorded stock-based compensation expenses related to restricted stock units in the amount of
In accordance with ASC 718, restricted shares units to employees and directors are measured at their fair value on the grant date. All restricted shares units granted in 2013 and 2012 were granted for no consideration; therefore their fair value was equal to the share price at the date of grant, based on the close trading price of our shares known at the grant date. The restricted shares units to non-employees consultants are remeasured in any future vesting period for the unvested portion of the grants.