WARRANTS

3 Months Ended

May 31, 2013

Warrants

Note 4. WARRANTS

For the three months ended May 31, 2013, the Company issued 70,000 warrants in connection with the issuance of Convertible Promissory Notes referenced in Note 5 below. These warrants were issued between March 1, 2013 and May 14, 2013, are exercisable at $3.00 per share and expire between March 1, 2017 and May 14, 2017. These warrants vest immediately. The Company analyzed the transaction for derivative liability and determined it did not apply.

In connection with the issuance of the Convertible Promissory Notes, we issued placement agent warrants in an aggregate amount to purchase 8,480 shares of common stock. These placement agent warrants are exercisable at $2.50 per share, have a term of 5 years and a cashless exercise feature and vest immediately. The fair value of these warrants was determined to be $25,498, as calculated using the Black-Scholes model. Assumptions used in the Black-Scholes model included: (1) a discount rate of 0.75%; (2) an expected term of 5 years; (3) an expected volatility of 301%; and (4) zero expected dividends.

The following table summarizes common stock purchase warrants issued and outstanding:

	Warrants		Weighted average exercise price		Aggregate intrinsic value		Weighted average remaining contractual life (years)
Outstanding at February 28, 2013		2,732,074	$	1.12	$	6,489,388		3.52
Granted		78,480	$	2.95		-		3.89
Exercised		-		-		-		-
Forfeited		-		-		-		-
Expired		-		-		-		-
Outstanding at May 31 2013		2,810,554	$	1.18	$	3,770,130		3.53

The following table summarizes common stock purchase warrants issued and outstanding:

Warrants exercisable at May 31, 2013 are:

Exercise				Weighted average		Exercisable number of
prices		Number of shares		remaining life (years)		shares
$	0.68		220,000		3.46		220,000
$	0.91		1,497,122		3.67		1,497,124
$	1.40		786,250		3.24		786,250
$	1.50		150,000		3.35		150,000
$	2.50		8,480		4.77		8,480
$	3.00		148,700		3.75		148,700