STOCK OPTIONS, RESTATED

9 Months Ended

Nov. 30, 2013

Stock Options Restated

Note 3. STOCK OPTIONS, RESTATED

During the nine months ended November 30, 2013, the Company issued options to purchase 300,000 shares of common stock at $3.25 per share to members of its management team and its Board of Directors. 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 $632,794, as calculated using the Black-Scholes model. Assumptions used in the Black-Scholes model included: (1) a discount rate of 0.68%; (2) an expected term of 5.25 years; (3) an expected volatility of 129%; and (4) zero expected dividends.  During the three and nine months ended November 30, 2013, the Company recognized $158,199 and $474,596, respectively, in stock option expense.

During the nine months ended November 30, 2013, the Company issued options to purchase 523,500 shares of common stock at $3.25 per share to 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. Compensation expense related to these options will be measured at each vesting date. The aggregated fair value of these options on the third measurement date amounted to $891,512 as calculated using the Black-Scholes model. Average assumptions used in the Black-Scholes model included: (1) a discount rate of 2.56%; (2) an expected term of 9.60 years; (3) an expected volatility of 125%; and (4) zero expected dividends.  During the three and nine months ended November 30, 2013, the Company recognized $180,599 and $710,912, respectively, 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		8.86
Granted		823,500	$	3.25		-		9.35
Exercised		-		-		-		-
Forfeited		-		-		-		-
Expired		-		-		-		-
Outstanding and expected to vest  at November 30, 2013		1,940,000	$	1.77	$	733,500		8.63

As of November 30, 2013, 896,500 options are exercisable at $0.68 per share with a weighted average life of 8.11 years and 823,500 options are exercisable at $3.25 with a weighted average life of 9.35 years. Additionally, 220,000 options with an exercise price of $0.68 and a weighted average life of 8.11 years have yet to vest.