Stockholders' Equity

Common Stock

During the three months ended October 31, 2017, the Company issued 11,280 shares of Common Stock.

On September 11, 2017, the Company issued 7,997 shares of its Common Stock in relation to the cashless exercise of a stock option that was granted outside of the Company's 2017 Long-Term Incentive Stock Plan (the "2017 Plan"). The option was for 10,000 shares of Common Stock with an exercise price of $10.00 per share. There was no expense to be recorded in relation to this stock option exercise.

On September 23, 2017, the Company issued 3,283 shares of its Common Stock to Torreya Partners (Europe) LLP ("Torreya"). These shares were issued as payment in full for a $100 thousand accrued liability owed by the Company to Torreya pursuant to that certain Supplemental Engagement Letter between the Company and Torreya, dated September 8, 2017 (the "Supplemental Engagement Letter"). The Company valued these shares at $40.58 per share, or approximately $133 thousand in the aggregate, which represents the closing price of the Company's Common Stock on September 22, 2017. The Company recognized a loss on the settlement of the accrued liability of $33 thousand.

Stock Options

On September 8, 2017, the Company held its Annual Meeting of Stockholders (the “Annual Meeting”), at which time the 2017 Plan was approved by stockholder vote. The 2017 Plan allows the Company to grant both incentive stock options (“ISOs”) and non-qualified stock options (“NSOs”) to purchase a maximum of 400,000 shares of the Company's Common Stock. Under the terms of the 2017 Plan, ISOs may only be granted to Company employees and directors, while NSOs may be granted to employees, directors, advisors, and consultants. The Board has the authority to determine to whom options will be granted, the number of options, the term, and the exercise price. Options are to be granted at an exercise price not less than fair value for an ISO or an NSO. The vesting period is normally over a period of four years from the vesting date. The contractual term of an option is no longer than ten years.

Prior to adopting the 2017 Plan, the Company did not have a formal long-term incentive stock plan. Prior to the implementation of the 2017 Plan, the Company had discretion to provide designated employees of the Company and its affiliates, certain consultants, and advisors who perform services for the Company and its affiliates, and non-employee members of the Board and its affiliates with the opportunity to receive grants of non-qualified stock options (the "Pre-2017 Non-Qualified Stock Options"). All of the Pre-2017 Non-Qualified Stock Option Grants were intended to qualify as non-qualified stock options. There were no Pre-2017 Non-Qualified Stock Option Grants that were intended to qualify as incentive stock options.

Pre-2017 Non-Qualified Stock Options

As of October 31, 2017, the Company had granted Pre-2017 Non-Qualified Stock Options to purchase, in the aggregate, 3,188,000 shares of the Company's Common Stock. During the three months ended October 31, 2017, the Company did not grant any Pre-2017 Non-Qualified Stock Options.

On September 5, 2017, the Company accepted, effective September 11, 2017, the resignation of Kevin Pollack as (i) the Company’s Chief Financial Officer, Treasurer and Secretary, and (ii) a director of Opiant Pharmaceuticals UK Limited, a wholly owned subsidiary of the Company. Pursuant to the terms of Mr. Pollack's Separation Agreement, Mr. Pollack agreed to forfeit previously granted options to purchase, in the aggregate, 572,000 shares of the Company's Common Stock. These options were fully vested and exercisable at the time of forfeiture.

On September 11, 2017, an option holder exercised 10,000 Pre-2017 Non-Qualified Stock Options at an exercise price of $10.00 per share. This option was exercised on a cashless basis and resulted in the Company issuing 7,997 shares of its Common Stock to the option holder.

On September 30, 2017, the Company remeasured two prior period Pre-2017 Non-Qualified Stock Option grants made to a consultant, as September 30, 2017 represented the final vesting date of these two option grants. The Company valued these options using the Black-Scholes-Merton ("Black-Scholes") option pricing model, which resulted in the Company recording approximately $92.3 thousand of non-cash expense during the three months ended October 31, 2017. These two option grants have been fully expensed as of October 31, 2017.

During the three months ended October 31, 2016, the Company granted Pre-2017 Non-Qualified Stock Options to purchase a total of 50,000 shares of its Common Stock exercisable on a cashless basis to two employees. These options had an exercise price of $10.00 and a term of 10 years. These options vest as follows: 1,388 shares vest upon each of the first through twentieth month anniversaries of the grant date and 1,390 shares vest upon each of the twenty-first through thirty-sixth month anniversaries of the grant date. The Company valued these options using the Black-Scholes option pricing model which resulted in a fair market value of approximately $425 thousand, in the aggregate, as of the date of grant.

The assumptions used in the valuation of the Pre-2017 Non-Qualified Stock Options for the three months ended October 31, 2017 and 2016 are as follows:



	2017			2016
Market value of stock on measurement date	$	36.79		$7.52 to $8.71
Risk-free interest rate	1.47		%	0.88% to 1.75%
Dividend yield	—		%	—	%
Volatility factor	96		%	114% to 348%
Term	2.12			3.03 to 10.00 years

Stock option activity for the Pre-2017 Non-Qualified Stock Options for the three months ended October 31, 2017 is presented in the table below:



	Number of Shares		Weighted- average Exercise Price		Weighted- average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in Thousands)
Outstanding at July 31, 2017	3,770,000		$	8.13	6.87	$	19,140
Exercised	(10,000	)	$	10.00
Forfeited	(572,000	)	$	11.51
Outstanding at October 31, 2017	3,188,000		$	7.52	6.97	$	98,409
Exercisable at October 31, 2017	2,894,378		$	7.34	6.81	$	89,873

A summary of the status of the Company’s non-vested Pre-2017 Non-Qualified Stock Options as of October 31, 2017 and changes during the three months ended October 31, 2017 are presented below:



	Number of Shares		Weighted Average Grant Date Fair Value Per Share
Non-vested at July 31, 2017	339,871		$	7.93
Vested	(46,249	)	$	9.46
Non-vested at October 31, 2017	293,622		$	7.94

During the three months ended October 31, 2017 and 2016, the Company recognized approximately $420 thousand and $181 thousand, respectively, of non-cash expense related to vested Pre-2017 Non-Qualified Stock Options granted in prior periods. As of October 31, 2017, there was approximately $1.3 million of unrecognized compensation costs related to non-vested Pre-2017 Non-Qualified Stock Options.

The 2017 Plan

On September 8, 2017, the Company granted an option to its Controller to purchase 40,000 shares of the Company’s Common Stock at an exercise price of $49.93 per share, which represents the per share closing price of the Company’s Common Stock on the date of grant. This option was issued under the 2017 Plan and has a ten year term. The option vests as follows: 25% on the one year anniversary of the grant date and then 1/48^th of the option shares vest on such date every month thereafter through the fourth anniversary of the grant date. The Company valued this option using the Black-Scholes option pricing model and estimated the fair value on the grant date to be approximately $1.99 million. During the three months ended October 31, 2017, the Company recognized approximately $196 thousand of expense related to this option grant.

On September 12, 2017, the Company granted an option to David D. O’Toole, the Company's Chief Financial Officer, to purchase 150,000 shares of the Company’s Common Stock at an exercise price of $36.00 per share, which represents the closing price of the Company’s Common Stock on the date of grant. This option was issued under the Company’s 2017 Plan and has a ten year term. The option vests as follows: 25% on the one year anniversary of the grant date and then 1/48^th of the option shares vest on such date every month thereafter through the fourth anniversary of the grant date. The Company valued this option using the Black-Scholes option pricing model and estimated the fair value on the grant date to be approximately $5.4 million. During the three-month period ended October 31, 2017, the Company recognized approximately $530 thousand of expense related to this option grant.

On September 18, 2017, the Company granted an option to a consultant to purchase 15,000 shares of the Company’s Common Stock at an exercise price of $27.56 per share, which represents the closing price of the Company’s Common Stock on the date of grant. This option was issued under the Company’s 2017 Plan and has a ten year term. The option vests as follows: 1/3^rd on the one year anniversary of the grant date and then 1/36^th of the option shares vest on such date every month thereafter through the third anniversary of the grant date. The Company valued this option using the Black-Scholes option pricing model and estimated the fair value on the grant date to be approximately $413 thousand. The Company remeasured this option as of October 31, 2017 and estimated its value to be $576 thousand. During the three months ended October 31, 2017, the Company recognized approximately $66 thousand of expense related to this option grant.

On October 24, 2017, the Company granted an option to an employee to purchase 1,500 shares of the Company’s Common Stock at an exercise price of $29.02 per share, which represents closing price of the Company’s Common Stock on the date of grant. This option was issued under the Company’s 2017 Plan and has a ten year term. The option vests as follows: 25% on the one year anniversary of the grant date and then 1/48^th of the option shares vest on such date every month thereafter through the fourth anniversary of the grant date. The Company valued this option using the Black-Scholes option pricing model and estimated the fair value on the date of grant to be $43.5 thousand. The Company will begin expensing this option in November 2017.

The assumptions used in the valuation of options granted under the 2017 Plan during the three months ended October 31, 2017 are as follows:



	For the Three Months Ended October 31, 2017
Market value of stock on measurement date	$27.56 to $49.93
Risk-free interest rate	2.05% to 2.42%
Dividend yield	—	%
Volatility factor	327% to 329%
Term	10.00 years

Stock option activity for options granted under the 2017 Plan during the three months ended October 31, 2017 is presented in the table below:



	Number of Shares		Weighted- average Exercise Price		Weighted- average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in Thousands)
Outstanding at July 31, 2017	—
Total Options authorized	400,000
Granted	(206,500	)	$	38.03
Expired	—
Forfeited	—
Options available at October 31, 2017	193,500
Outstanding at October 31, 2017	206,500		$	38.03	9.87	$	535
Exercisable at October 31, 2017	—

A summary of the status of the Company’s non-vested options granted under the 2017 Plan as of October 31, 2017 and changes during the three months ended October 31, 2017 are presented in the following table:



	Number of Shares		Weighted Average Grant Date Fair Value Per Share
Non-vested at July 31, 2017	—
Granted	(206,500	)	$	38.82
Vested	—
Non-vested at October 31, 2017	206,500		$	38.82

During the three months ended October 31, 2017, the Company recognized approximately $792 thousand of non-cash expense related to vested options granted during this period. As of October 31, 2017, there was approximately $7.2 million of unrecognized compensation costs related to non-vested stock options that were granted under the 2017 Plan.

Warrants

During the three-month period ended October 31, 2017, the Company did not issue any warrants.

On September 5, 2017, the Company accepted, effective September 11, 2017, the resignation of Kevin Pollack as (i) the Company’s Chief Financial Officer, Treasurer and Secretary, and (ii) a director of Opiant Pharmaceuticals UK Limited, a wholly owned subsidiary of the Company. Pursuant to the terms of Mr. Pollack's Separation Agreement, he agreed to forfeit a previously issued warrant to purchase 55,000 shares of the Company's Common Stock. This warrant was fully vested and exercisable at the time of forfeiture.

Warrant activity for the three months ended October 31, 2017 is presented in the table below:



	Number of Shares		Weighted- average Exercise Price		Weighted- average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding at July 31, 2017	768,800		$	12.50	3.04	$	1,184
Forfeited	(55,000	)	$	15.00
Outstanding at October 31, 2017	713,800		$	12.31	2.99	$	18,617
Exercisable at October 31, 2017	713,800		$	12.31	2.99	$	18,617