SHAREHOLDERS' EQUITY

6 Months Ended

Aug. 31, 2012

SHAREHOLDERS' EQUITY [Abstract]

SHAREHOLDERS' EQUITY

NOTE 8–SHAREHOLDERS' EQUITY

Common Stock

During the six months ended August 31, 2012, we issued 350,000 shares of Common Stock for services rendered valued at $266,000, 200,000 shares of common stock for consideration of $152,000, and 206,941 shares upon conversion of $157,276 of notes payable and accrued interest.

During the six months ended August 31, 2011, we issued 2,150,849 shares of Common Stock for cash consideration of $1,221,020. We also issued 2,227,612 shares of Common Stock for the conversion of $1,513,841 of notes payable and accrued interest, 500,000 shares of Common Stock for services to be rendered in the amount of $375,000, 908,593 shares of Common Stock in satisfaction of $599,492 of accounts payable, and 3,042,199 shares of Common Stock in satisfaction of accrued and unpaid compensation.

Employee Stock Options

During the six months ended August 31, 2012, the Company granted 564,000 options to certain employees.  These options vest over three years, have an exercise price of $0.75, and have a five year life.  The grant date fair value of these options amounted to $146,893 which was calculated using the Black-Scholes option pricing model with the following assumptions:  risk free rate of return of 0..69%, volatility of 73.3%, 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 29, 2012		$	0.75-$1.00	$	0.00		6,268,500
Cancelled		$	0.75				(313,000	)
Granted		$	0.75				564,000
Outstanding, August 31, 2012		$	0.75-$1.00	$	0.00		6,519,500

The exercise prices for the options outstanding at August 31, 2012, 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		6,519,500	2.78 years	$	0.80	2.29 years	5,027,168	$	0.77

Warrants

Activity in issued and outstanding warrants is as follows:

	Number of Shares			Exercise Prices
Outstanding, February 29, 2012		31,009,738		$	0.75-$4.00
Granted		406,941		$	1.00
Expired		(523,595	)	$	4.00
Outstanding, August 31, 2012		30,893,084		$	0.75-$4.00

The exercise prices for the warrants outstanding at August 31, 2012, 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		406,941		406,941	59 months	$	1.00	$	1.00	$	0.00
$	0.75-$1.00		6,225,000		6,225,000	49 months	$	0.99	$	0.99	$	0.00
$	1.00		16,722,787		16,722,787	48 months	$	1.00	$	1.00	$	0.00
$	1.50		155,000		155,000	43 months	$	1.50	$	1.50	$	0.00
$	0.75-1.50		1,109,198		1,109,198	40 months	$	1.17	$	1.17	$	0.00
$	1.50		156,000		156,000	36 months	$	1.50	$	1.50	$	0.00
$	1.50		704,000		704,000	35 months	$	1.50	$	1.50	$	0.00
$	1.50		350,642		350,642	32 months	$	1.50	$	1.50	$	0.00
$	0.75-$2.00		58,000		58,000	28 months	$	1.78	$	1.78	$	0.00
$	2.00		725,721		725,721	25 months	$	2.00	$	2.00	$	0.00
$	0.75-2.00		3,650,000		3,650,000	22 months	$	1.03	$	1.03	$	0.00
$	3.00		170,000		170,000	15 months	$	3.00	$	3.00	$	0.00
$	3.00-$4.00		459,795		495,795	1 months	$	3.46	$	3.46	$	0.00
			30,893,084		30,893,084