EQUITY TRANSACTIONS

12 Months Ended

Feb. 29, 2012

Notes to Financial Statements

EQUITY TRANSACTIONS

NOTE 8:   EQUITY TRANSACTIONS

Restricted Stock Grants

During fiscal year 2012, 75,000 shares of restricted common stock were issued by the Company for services rendered valued at $21,750.  During fiscal year 2011, 28,500 shares of restricted common stock were issued by the Company for services rendered valued at $6,270.  All shares of restricted stock were fully vested upon issuance but not able to be traded on the open market upon issuance.  The values recorded were based on the estimated fair value of the stock on the dates of grant.

Repurchase of Common Shares

During fiscal year 2011, the Company purchased 57,500 shares of common stock from the public market for $17,549.  These shares were held by the Company in treasury at February 28, 2011. During fiscal year 2012, the Company purchased an additional 100,000 shares of common stock from the public market for $25,000.  The total number of shares purchased through both fiscal years was cancelled on February 29, 2012.

Warrants

A summary of warrant activity for the fiscal years ended February 29, 2012 and February 28, 2011 is shown below.

			Weighted-
			Average
	Warrants		Exercise
	Outstanding		Price
Outstanding at February 28, 2010		6,549,721		0.25
Granted		8,467,221		0.21
Exercised		-		-
Forfeited		(6,549,721)		0.25
Outstanding at February 28, 2011		8,467,221		0.21
Granted
Exercised		-		-
Forfeited
Outstanding at February 29, 2012		8,467,221		0.21
Vested at February 29, 2012		1,693,444		0.21
Exercisable at February 29, 2012		1,693,444		0.21

 The following table summarizes significant ranges of outstanding warrants as of February 29, 2012:

		Warrants Outstanding						Warrants Exercisable
				Weighted		Weighted				Weighted
				Average		Average				Average
				Remaining		Exercise		Number		Exercise
Exercise Price		Number		Life (Years)		Price		Outstanding		Price
	$   0.21		8,467,221		8.79		$   0.21		1,693,444		$   0.21

During the year ended February 28, 2011, 8,467,221 warrants were issued to employees and related parties for future services to be rendered, with a vesting term of five (5) years and an exercise price of $0.21.  The fair value of these warrants on the date of grant totaled approximately $1.7 million and is being amortized to income over the vesting period.

As of February 29, 2012 the total outstanding warrants had an intrinsic value of $2,032,133.  

Contributed Executive Services

The President of the Company has historically elected that he would not accept his salary until the Company had become profitable.  Even though the Company achieved profitable operations, he continued to not accept his salary for the year ended February 28, 2011. Accordingly,  as it had in earlier years, the Company recorded expense of $10,000, the contractual value of his services, and additional paid in capital in the accompanying consolidated statements of stockholders’ equity.  A similar expense was not recorded for the year ended February 29, 2012, as a result of the resolution of the legal matter discussed in Note 10.   Effective May 15, 2012 this employment agreement with the President was terminated.