SHAREHOLDERS' EQUITY

9 Months Ended

Nov. 30, 2011

SHAREHOLDERS' EQUITY [Abstract]

SHAREHOLDERS' EQUITY

NOTE 9–SHAREHOLDERS' EQUITY

Common Stock

During the nine months ended November 30, 2011, we issued 2,460,849 shares of Common Stock for cash consideration of $1,453,520. We also issued 2,227,612 shares of Common Stock for the conversion of $1,515,960 of notes payable and accrued interest, 1,225,000 shares of Common Stock for services to be rendered in the amount of $885,000, 908,593 shares of Common Stock in satisfaction of $599,492 of accounts payable, 859,999 shares as finders fees, and 3,042,199 shares of Common Stock in satisfaction of $2,259,865 of accrued and unpaid compensation.

During the nine months ended November 30, 2010, we issued 2,700,766 shares of Common Stock for cash consideration of $1,453,894. We also issued 338,408 shares of Common Stock for the conversion of $181,852 of notes payable and accrued interest, 1,093,384 shares of Common Stock for investor relations services, marketing services, and finders fees related to financing, valued at $803,000, and 367,619 shares of  Common Stock for the settlement of $270,029 of accounts payable. We also received $50,000 for 100,000 shares which were issued subsequent to the quarter end and are recorded as shares to be issued.

Employee Stock Options

During the nine months ended November 30, 2011, the Company granted 1,319,000 options to certain employees.  These options vest over three years, have an exercise price of $1.00, and have a five year life.  The grant date fair value of these options amounted to $503,933 which was calculated using the Black-Scholes option pricing model with the following assumptions:  risk free rate of return of 1.12%, volatility of 78.99%, a dividend yield of 0%, and an expected life of 5 years.

In September, 2006, our Board of Directors adopted the 2006 Employee Stock Option Plan. Activity in this plan is as follows:

	2006 Plan
		Weighted-Average Exercise Price		Aggregate Intrinsic Value		Number of Options
Outstanding, February 28, 2011		$	0.75	$	0.00		5,304,500
Granted		$	0.75-$1.00	$	0.00		1,319,000
Cancelled		$	0.75	$	0.00		(207,278	)
Outstanding, November 30, 2011		$	0.75-$1.00	$	0.00		6,416,222

The exercise prices for the options outstanding at November 30, 2011, and information relating to these options is as follows:

Options Outstanding							Exercisable Options
Range of Exercise Price		Number		Weighted Average Remaining Life	Weighted Average Exercise Price		Weighted Average Remaining Life	Number	Weighted Average Exercise Price
$	0.75-$1.00		6,416,222	3.1 years	$	0.80	2.8 years	5,000,305	$	0.76

Warrants

Activity in issued and outstanding warrants is as follows:

	Number of Shares			Exercise Prices
Outstanding, February 28, 2011		8,688,576		$	0.75-$4.00
Granted		23,102,787		$	1.00-$1.50
Expired		(275,808	)	$	1.00-$4.00
Outstanding, November 30, 2011		31,515,555		$	0.75-$4.00

During the nine months ended November 30, 2011, the Company granted 9,400,000 warrants to certain employees & directors.  These warrants vest immediately, have an exercise price of $1.00, and have a five year life.  The grant date fair value of these warrants amounted to $3,562,578 which was calculated using the Black-Scholes option pricing model with the following assumptions:  

  Stock Warrants Granted       Risk free rate of return       Volatility   Dividend Yield Expected Life

9,000,000                  0.98%                            78.99%                          0%                                 5 years                                                400,000                       0.625%                                  78.83%                              0%                               5 years

The exercise prices for the warrants outstanding at November 30, 2011, and information relating to these warrants is as follows:

Range of Exercise Prices		Stock Warrants Outstanding		Stock Warrants Exercisable		Weighted-Average Remaining Contractual Life	Weighted-Average Exercise Price of Warrants Outstanding		Weighted-Average Exercise Price of Warrants Exercisable		Intrinsic Value
$	1.00		6,225,000		5,825,000	58 months	$	1.00	$	1.00	$	0.00
$	1.00		16,722,787		8,872,787	56 months	$	1.00	$	1.00	$	0.00
$	1.50		155,000		155,000	52 months	$	1.50	$	1.50	$	0.00
$	0.75-1.50		2,693,286		2,693,286	38 months	$	0.90	$	0.90	$	0.00
$	0.75-1.25		1,314,710		1,314,710	32 months	$	1.25	$	1.25	$	0.00
$	1.50		1,900,000		1,900,000	31 months	$	1.50	$	1.50	$	0.00
$	1.00-$4.00		1,934,991		1,934,991	5 months	$	3.90	$	3.90	$	0.00
$	4.00		569,781		569,781	2 months	$	4.00	$	4.00	$	0.00
			31,515,555		23,265,555