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WARRANTS

9 Months Ended

Nov. 30, 2013

Between March 1, 2013 and May 14, 2013, the Company issued 70,000 warrants in connection with the issuance of 2013 Notes referenced in Note 5 below. These warrants are exercisable at $3.00 per share and expire between March 1, 2017 and May 14, 2017. On November 15, 2013, the Company issued 83,333 warrants in connection with the issuance of the 2014 Notes referenced in Note 5 below. These warrants are exercisable at $2.10 per share and expire on November 15, 2017. These warrants vest immediately. The warrants do not contain any provision that would require liability treatment. Therefore, they were classified as equity in the Condensed Consolidated Balance Sheet.

In connection with the issuance of the 2013 Notes, the Company issued placement agent warrants to purchase an aggregate of 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. Average assumptions used in the Black-Scholes model included: (1) a discount rate of 0.74%; (2) an expected term of 5 years; (3) an expected volatility of 134%; 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		161,813		2.51		-		3.68
Exercised		-		-		-		-
Forfeited		-		-		-		-
Expired		-		-		-		-

Outstanding at November 30, 2013		2,893,887	$	1.20	$	1,143,289		3.05

Warrants exercisable at November 30, 2013 are:

Exercise				Weighted average		Exercisable number of
prices		Number of shares		remaining life (years)		shares
$	0.68		220,000		2.96		220,000
$	0.91		1,497,124		3.17		1,497,124
$	1.40		786,250		2.74		786,250
$	1.50		150,000		2.85		150,000
$	2.10		83,333		3.96		83,333
$	2.50		8,480		4.27		8,480
$	3.00		148,700		3.25		148,700