5.	Stockholders’ Equity

Common Stock

On November 2, 2016, the Company granted 1,000 restricted shares of Company’s Common Stock to a consultant pursuant to a consulting agreement dated October 12, 2016 for consulting services provided by the consultant. The shares issued in this transaction were valued using the stock price on the issuance date, which was $7.52 per share, and resulted in a value of $7,520. Accordingly, the Company recorded a $7,520 non-cash expense during the nine-month period ended April 30, 2017.

On November 10, 2016, the Company issued 14,327 shares of unregistered Common Stock pursuant to the LOI described in Note 6 – Commitments. Pursuant to the terms of the LOI, the Company was obligated to issue these shares on the one year anniversary of the effective date of the LOI. The shares issued in this transaction were valued using the stock price at issuance date, which was $5.94 per share, and resulted in a value of $85,102. The Company recorded the entire $85,102 as a non-cash expense during the nine-month period ended April 30, 2017.

On March 16, 2017, the Company issued 10,745 shares of unregistered Common Stock pursuant to the LOI described in Note 6 – Commitments. Per the terms of the LOI, the Company was obligated to issue these shares upon the one year anniversary of receipt, by the Company, of a milestone payment from Adapt Pharma Limited for the first commercial sale of the Company’s product, NARCAN® (naloxone hydrochloride) Nasal Spray, in the U.S. The shares issued in this transaction were valued on the date of issuance using the March 16, 2017 closing price of $7.75 per share, which resulted in an aggregate value of $83,274. The Company expensed the entire $83,274 as non-cash expense during the nine-month period ended April 30, 2017.

On March 16, 2017, the Company issued 1,875 shares of unregistered Common Stock to Brad Miles, who serves as an advisor to the Company. The shares issued in this transaction were valued on the date of issuance using the March 16, 2017 closing price of $7.75 per share, which resulted in an aggregate value of $14,531. The Company expensed the entire $14,531 as non-cash expense during the nine-month period ended April 30, 2017.

Stock Options

As required by the Stock Compensation Topic, ASC 718, the Company measures and recognizes compensation expense for all share based payment awards made to the officers and directors based on estimated fair values at the grant date and over the requisite service period.

On October 6, 2016, the Company granted options to purchase a total of 50,000 shares of Common Stock exercisable on a cashless basis to two employees. These options all have an exercise price of $10.00 and a term of 10 years. The options vest as follows: 1,388 shares vest upon each of the first through twentieth month anniversaries of the grant date; 1,390 shares vest upon each of the twenty-first through thirty-sixth month anniversaries of the grant date. The Company has valued these options using the Black-Scholes option pricing model which resulted in a fair market value of $425,000, of which $213,282 has been recognized as non-cash expense for the nine months ended April 30, 2017.

On November 4, 2016, the Company appointed Thomas T. Thomas to the Board and granted Mr. Thomas an option to purchase 35,000 shares of Common Stock exercisable on a cashless basis. This option has an exercise price of $10.00, a term of 5 years and vests as follows: (i) 11,667 shares vest upon the uplisting of the Company to the NASDAQ Stock Market; (ii) 11,667 shares vest upon the cumulative funding of the Company of or in excess of $5,000,000 by institutional investors starting from November 4, 2016; and 11,666 shares vest upon the first submission of a New Drug Application to the U.S. Food and Drug Administration for one of Company’s products by Company itself or a Company licensee. The Company has valued this option using the Black-Scholes option pricing model which resulted in an aggregate value of $220,116, of which $134,188 has been recognized as expense for the nine months ended April 30, 2017.

On December 24, 2016, the Company granted an option to purchase a total of 35,000 shares of Common Stock exercisable on a cashless basis to an employee. The option has an exercise price of $10.00 and a term of 10 years. The option vests as follows: 972 shares vest upon each of the first through twenty-eighth month anniversaries of the grant date; 973 shares vest upon each of the twenty-ninth through thirty-sixth month anniversaries of the grant date. The Company has valued this option using the Black-Scholes which resulted in an aggregate value of $219,450, of which $75,363 has been recognized as non-cash expense for the nine months ended April 30, 2017.

On February 6, 2017, the Company granted an option to purchase 200,000 shares of the Company’s Common Stock to Phil Skolnick, the Company’s Chief Scientific Officer. This option was granted pursuant to Dr. Skolnick’s employment agreement (the “Skolnick Employment Agreement”) described in Note 6 – Commitments. Per the terms of Dr. Skolnick’s option agreement, the option shall expire on the day that is the earlier of: (a) 90 calendar days after Dr. Skolnick ceases to provide services to the Company, (b) 90 calendar days after the expiration of the Skolnick Employment Agreement, (c) the date Dr. Skolnick is terminated or there is a Fundamental Transaction (as defined in the Skolnick Employment Agreement), each as contemplated in the Skolnick Employment Agreement, or (d) 10 years from the date of issuance. Each share of Common Stock underlying the Option shall be exercisable on a cashless basis at an exercise price equal to $9.00. The option shall vest as follows: (i) 100,000 shares of Common Stock shall vest on the eighteen month anniversary of the grant date; (ii) 5,555 shares of Common Stock shall vest on each of the nineteen, twenty, twenty-one, twenty-two, twenty-three, twenty-four, twenty-five and twenty-six month anniversaries of the date of grant; and (iii) 5,556 shares of Common Stock shall vest on each of the twenty-seven, twenty-eight, twenty-nine, thirty, thirty-one, thirty-two, thirty-three, thirty-four, thirty-five and thirty-six month anniversaries of the grant date. The Company valued Dr. Skolnick’s option using the Black-Scholes option pricing model, which resulted in an aggregate value of $1,600,000, which the Company will expense on a non-cash basis over the three-year vesting schedule. During the three-month period ended April 30, 2017, the Company recorded $223,925 of non-cash expense related to this option. As of April 30, 2017, the Company had an additional $1,376,075 of non-cash expense to record over the remaining 33 months of vesting.

The Company also recognized stock based compensation expense of $242,318 in connection with vested options granted in prior periods.

On March 31, 2017, pursuant to their respective employment agreement acknowledgements, Dr. Sinclair and Dr. Crystal each voluntarily elected to forfeit, unconditionally and irrevocably, 395,000 and 785,000 shares of Common Stock of the Company, respectively, underlying stock options previously issued by the Company.

The assumptions used in the valuation for all of the options granted for the nine months ended April 30, 2017 and 2016 were as follows:

	2017			2016
Market value of stock on measurement date		$5.61 to 8.71		$	7.00
Risk-free interest rate		0.88-2.55	%		2.05	%
Dividend yield		0	%		0	%
Volatility factor		97-348	%		373	%
Term		2.53-10.00 years			10 years

Stock option activity for nine months ended April 30, 2017 is presented in the table below:

					Weighted-
			Weighted-		Average
			Average		Remaining		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Shares		Price		Term (Years)		Value
Outstanding at July 31, 2016		4,635,000	$	8.79		7.39	$	2,731,250
Granted		320,000	$	9.38
Expired		(2,500)	$	10.00
Forfeited		(1,180,000)	$	11.03
Outstanding at April 30, 2017		3,772,500	$	8.13		7.12	$	975,000
Exercisable at April 30, 2017		3,303,882	$	7.75		7.21	$	975,000

A summary of the status of the Company’s non-vested options as of April 30, 2017 and changes during the nine months ended April 30, 2017 are presented below:

Non-vested options
			Weighted Average
	Number of		Grant Date Fair
	Options		Value
Non-vested at July 31, 2016		90,833	$	7.27
Granted		320,000	$	7.70
Vested		(59,717)	$	6.93
Non-vested at April 30, 2017		351,116	$	7.73

At April 30, 2017, there was $2,001,413 of unrecognized compensation costs related to non-vested stock options.

Warrants

On March 13, 2017, the Company granted a warrant to purchase 45,000 shares of the Company’s Common Stock to Brad Miles, an advisor to the Company. Pursuant to the terms of the warrant, it is fully vested on the date of grant, has an exercise price of $10.00, an expiration date of three years from the date of grant, and may be exercised solely by payment of cash. The Company valued Mr. Miles’ warrant using the Black-Scholes option pricing model using the following criteria: (i) a per share stock price of $8.00, which represents the closing price of the Company’s Common Stock on March 13, 2017, (ii) a per share exercise price of $10.00, (iii) a term of three (3) years, (iv) volatility of 111%, (v) a dividend yield of zero, and (vi) a risk-free rate of 1.63%, which represents the yield on a three-year Treasury bond as of March 16, 2017. This resulted in an aggregate value of $229,360, which the Company expensed during the nine-month period ended April 30, 2017. The Company expensed the entire $229,360 because the warrant was fully vested as of the date of grant.

On March 31, 2017, Dr. Michael Sinclair, the Executive Chairman of the Board, and Dr. Roger Crystal, the Company’s Chief Executive Officer, each voluntarily entered into separate employment agreement acknowledgements whereby they elected to forfeit, unconditionally and irrevocably, 285,000 and 40,000 shares of common stock of the Company, respectively, as related to unexercised warrants previously granted by the Company.

Warrant activity for the nine months ended April 30, 2017 is presented in the table below:

					Weighted-
			Weighted-		Average
			Average		Remaining		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Shares		Price		Term (Years)		Value
Outstanding at July 31, 2016		1,215,385	$	17.90		2.86	$	-
Granted		45,000	$	10.00
Expired		(162,300)	$	47.23
Forfeited		(325,000)	$	15.00
Outstanding at April 30, 2017		773,085	$	12.51		3.27	$	-
Exercisable at April 30, 2017		373,085	$	9.84		6.06	$	-