2. BASIC INCOME (LOSS) PER SHARE

6 Months Ended

Aug. 31, 2012

Notes to Financial Statements

BASIC INCOME (LOSS) PER SHARE

Basic income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during each period presented.  Diluted income (loss) per share is determined using the weighted average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents.  In periods when losses are reported, the weighted average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.  The dilutive effect of outstanding stock options and warrants reflected in diluted earnings per share by application of the treasury stock method.

The denominator for diluted income per share for the three month period ended August 31, 2012 is adjusted to include the effect of dilutive common stock equivalents, consisting of warrants totaling 3,597,221.  The denominator for diluted loss per share for the six month period ended August 31, 2012 did not include warrants as they would have been anti-dilutive.  The denominator for diluted income per share for the three and six month periods ended August 31, 2011 is adjusted to include the effect of dilutive common stock equivalents, consisting of warrants totaling 3,078,989 and 2,971,844, respectively.