STOCK OPTIONS

3 Months Ended

May 31, 2013

Stock Options

Note 3. STOCK OPTIONS

During the three months ended May 31, 2013, the Company issued options to purchase 823,500 shares of common stock at $3.25 per share to members of its management team, members of its Board of Directors, members of its scientific advisory board and clinical advisory board and a consultant. The options vest in four equal installments on each of May 31, 2013, August 31, 2013, November 30, 2013 and February 28, 2014 and expire on April 5, 2023. These options have a total fair value of $2,592,349, as calculated using the Black-Scholes model. Assumptions used in the Black-Scholes model included: (1) a discount rate of 1.72%; (2) an expected term of 10 years; (3) an expected volatility of 134%; and (4) zero expected dividends. As of May 31, 2013, the Company recognized $648,087 in stock option expense.

The following table summarizes common stock options issued and outstanding:

	Options		Weighted average exercise price		Aggregate intrinsic value		Weighted average remaining contractual life (years)
Outstanding at February 28, 2013		1,116,500	$	0.68	$	2,526,500		8.61
Granted		823,500	$	3.25				9.85
Exercised		-		-		-		-
Forfeited		-		-		-		-
Expired		-		-		-		-
Outstanding at May 31, 2013		1,940,000	$	1.77	$	1,621,035		9.14

As of May 31, 2013, 896,500 options are exercisable at $0.68 per share with a weighted average life of 8.61 years and 823,500 options are exercisable at $3.25 with a weighted average life of 9.85 years.