COMMON STOCK PURCHASE WARRANTS

3 Months Ended

May 31, 2012

Notes to Financial Statements

COMMON STOCK PURCHASE WARRANTS

NOTE 3:   COMMON STOCK PURCHASE WARRANTS

Common Stock

During the quarter ended May 31, 2012, the Company did not issue any shares of common stock.  During the quarter ended May 31, 2011, the Company issued 50,000 shares of restricted common stock to a consultant for services rendered, valued at $15,500 based on the estimated fair value of the common stock on the date of the grant.

Contributed Executive Services

Historically, the President of the Company had a salary agreement which resulted in the Company recording expense of $10,000 annually for the contractual value of his services.  This agreement was terminated on May 15, 2012.

Warrants

The Company has determined the estimated value of warrants granted using the Black-Scholes pricing model. The amount of the expense charged to operations for warrants was $88,803 for the three months ended May 31, 2012 and $88,804 for the three months ended May 31, 2011.  All outstanding warrants are expected to be vested in December 2015.

A summary of warrant activity for the three months ended May 31, 2012 is as follows:

			Weighted-
			Average
	Warrants		Exercise
	Outstanding		Price
Outstanding at February 28, 2012		8,467,221		0.21
Granted		-		-
Exercised		-		-
Forfeited		-		-
Outstanding at May 31, 2012		8,467,221		0.21
Vested at May 31, 2012		1,693,444		0.21
Exercisable at May 31, 2012		1,693,444		0.21

The following table summarizes significant ranges of outstanding warrants as of May 31, 2012:

		Warrants Outstanding				Warrants Exercisable
			Weighted	Weighted			Weighted
			Average	Average			Average
Exercise Price		Number	Remaining	Exercise		Number	Exercise
		Outstanding	Life (Years)	Price		Outstanding	Price
$	0.21	8,467,221	8.54	$	0.21	1,693,444	$	0.21