3. COMMON STOCK PURCHASE WARRANTS

9 Months Ended

Nov. 30, 2014

Notes to Financial Statements

COMMON STOCK PURCHASE WARRANTS

NOTE 3:   COMMON STOCK PURCHASE WARRANTS

Common Stock

During the nine month period ended November 30, 2014, 60,000 shares of restricted stock were issued by the Company to employees. 50,000 shares vest over a two year period, with 17,000 shares vested upon issue, with 17,000 and 16,000 after one and two years, respectively. The other 10,000 shares were fully vested upon issuance. The value recorded in the accompanying condensed consolidated financial statements was based on the estimated fair value of the stock on the date of the grant and aggregated $3,800.

During the nine months 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 values recorded were 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 $88,175 and $264,525 for the three and nine month periods ended November 30, 2014, respectively, and $88,490 and $262,690 for the three and nine month periods ended November 30, 2013, respectively.  All outstanding warrants are expected to be vested in December 2015.

A summary of warrant activity for the nine months ended November 30, 2014 is as follows:

			Weighted-
			Average
	Warrants		Exercise
	Outstanding		Price
Outstanding at February 28, 2014		8,407,221		0.21
Granted		-		-
Exercised		-		-
Forfeited		-		0.21
Outstanding at November 30, 2014		8,407,221		0.21
Vested at November 30, 2014		6,305,415		0.21
Exercisable at November 30, 2014		6,305,415		0.21

The following table summarizes significant ranges of outstanding warrants as of November 30, 2014:

		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	8,407,221	6.04	$	0.21	6,305,415	$	0.21