3. COMMON STOCK PURCHASE WARRANTS

9 Months Ended

Nov. 30, 2013

Notes to Financial Statements

COMMON STOCK PURCHASE WARRANTS

NOTE 3:   COMMON STOCK PURCHASE WARRANTS

Common Stock

During the nine-month period ended November 30, 2013, the Company issued 20,000 shares of restricted common stock for services rendered valued at $4,600. All shares of restricted stock were fully vested upon issuance but not able to be traded on the open market upon issuance. The value recorded was based on the estimated fair value of the stock on the date of grant. During the nine-month period ended November 30, 2012, the Company issued 10,000 shares of restricted stock to an employee for services rendered, valued at $3,100. The value recorded was based on the estimated fair value of the stock on the date of grant.

Warrants

The Company has determined the estimated value of warrants granted using the Black-Scholes option pricing model. The amount of the expense charged to operations for warrants was $88,490 and $262,690 for the three and nine-month periods ended November 30, 2013, respectively, and $88,804 and $266,412 for the three and nine-month periods ended November 30, 2012, respectively.  All outstanding warrants are expected to be vested in December 2015.

A summary of warrant activity for the nine months ended November 30, 2013 is as follows:

				Weighted-
				Average
	Warrants			Exercise
	Outstanding			Price
Outstanding at February 28, 2013		8,467,221			0.21
Granted		-			-
Exercised		-			-
Forfeited		(30,000	)		0.21
Outstanding at November 30, 2013		8,437,221			0.21
Vested at November 30, 2013		3,374,888			0.21
Exercisable at November 30, 2013		3,374,888			0.21

The following table summarizes significant ranges of outstanding warrants as of November 30, 2013:

		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	8,437,221	7.04	$	0.21	3,374,888	$	0.21