STOCK OPTIONS

3 Months Ended

May 31, 2016

Stock Options

STOCK OPTIONS

During the three months ended May 31, 2015, the Company issued options to purchase 6,667 shares of common stock at $11.25 per share to a consultant. The options vest upon achieving certain performance-based milestones and expire on March 1, 2025. The Company will measure the fair value of these options with vesting contingent on achieving certain performance-based milestones and recognize the compensation expense when vesting becomes probable.  The fair value will be measured using a Black-Scholes model. During the three months ended May 31, 2015, 1,667 of these options with an aggregate fair value of $8,000 vested based on achieving certain milestones.

During the three months ended May 31, 2015, the Company issued options to purchase 80,000 shares of common stock at $8.25 per share to non-executive members of its Board. The options vest in three equal installments on each of May 18, 2016, May 18, 2017, and May 18, 2018 and expire on May 18, 2025. These options had a total fair value of $388,000 as calculated using the Black-Scholes model.

During the three months ended May 31, 2016, the Company issued options to purchase 50,000 shares of common stock at $2.19 per share to a non-executive member of its Board. These 50,000 options vest in three equal installments on each of May 26, 2017, May 26, 2018, and May 26, 2019 and expire on May 26, 2026. These options had a total fair value of $86,500 as calculated using the Black-Scholes model.

During the three months ended May 31, 2016, the Company issued options to purchase 50,000 shares of common stock at $2.19 per share to a non-executive member of its Board for performing other services. These 50,000 options vest upon achieving a certain milestone and expire on May 26, 2026. These options will be measured and recognized when vesting becomes probable.

The weighted average inputs to the Black-Scholes model used to value the stock options granted during the three months ended May 31, 2016 and 2015 are as follows:

	May 31, 2016			May 31,  2015
Expected volatility		100	%		123	%
Expected dividend yield		0.00	%		0.00	%
Risk-free interest rate		1.65	%		1.88	%
Expected Term	6.00 years			6.08 years

For the three months ended May 31, 2016, the Company recognized $104,836 of compensation expense related to stock options, of which $87,628 was recognized in general and administrative expenses and $17,208 in research and development expenses.

For the three months ended May 31, 2015, the Company recognized $38,240 of compensation expense related to stock options, which was recognized in general and administrative expenses.

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 29, 2016		426,976	$	14.45	$	-		7.98
Granted		100,000		2.19		-		-
Exercised		-		-		-		-
Forfeited		-		-		-		-
Expired		-		-		-		-
Outstanding and expected to vest at May 31, 2016		526,976	$	12.12	$	-		8.16
Exercisable at May 31, 2016		214,243	$	18.28	$	-		6.63

The following table breaks down exercisable and unexercisable common stock options by exercise price as of May 31, 2016:

Exercisable						Unexercisable
Number of Options		Exercise Price		Weighted Average Remaining Life (years)		Number of Options		Exercise Price		Weighted Average Remaining Life (years)
	-	$	2.19		-		100,000	$	2.19		9.99
	13,875	$	3.55		9.68		41,625	$	3.55		9.68
	1,068	$	8.10		8.67		-	$	8.10		-
	75,003	$	8.25		4.36		106,	$	8.25		9.00
	52,434	$	10.20		5.61		-	$	10.20		-
	3,334	$	11.25		8.97		3,333	$	11.25		8.97
	8,890	$	16.50		8.38		31,110	$	16.50		8.38
	14,735	$	22.50		8.16		30,000	$	22.50		7.55
	44,904	$	48.75		6.85		-	$	48.75		-
	214,243	$	18.28		6.63		312,733	$	7.91		9.21

As of May 31, 2016, we had approximately $353,000 of unrecognized compensation related to employee and consultant stock options that are expected to vest over a weighted average period of 1.43 years and, approximately $272,000 of unrecognized compensation related to employee stock options whose recognition is dependent on certain milestones to be achieved.  Additionally, there were 93,333 stock options with a performance vesting condition that were granted to consultants which will be measured and recognized when vesting becomes probable.