SHAREHOLDERS' EQUITY

9 Months Ended

Nov. 30, 2012

SHAREHOLDERS' EQUITY [Abstract]

SHAREHOLDERS' EQUITY

NOTE 8–SHAREHOLDERS' EQUITY

Common Stock

During the nine months ended November 30, 2012, we issued 415,789 shares of Common Stock for services rendered valued at $316,000, 200,000 shares of common stock for consideration of $152,000, and 341,748 shares upon conversion of $259,729 of notes payable and accrued interest.

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.

Employee Stock Options

During the nine months ended November 30, 2012, the Company granted 566,500 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 $147,470 which was calculated using the Black-Scholes option pricing model with the following assumptions:  risk free rate of return of 0.62%, volatility of 70,85%, 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		566,500
Outstanding, November 30, 2012		$0.75-$1.00	$0.00	6,522,000

The exercise prices for the options outstanding at November 30, 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

6,522,000

2.28 years

$

0.80

1.84 years

5,162,328

$

0.78

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	(983,390)	$3.00-$4.00
Outstanding, November 30, 2012	30,433,289	$0.75-$4.00

The exercise prices for the warrants outstanding at November 30, 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	56 months	$1.00	$1.00	$0.00
$0.75-$1.00	6,225,000	6,225,000	46 months	$0.99	$0.99	$0.00
$1.00	16,722,787	16,722,787	45 months	$1.00	$1.00	$0.00
$1.50	155,000	155,000	40 months	$1.50	$1.50	$0.00
$0.75-1.50	1,109,198	1,109,198	37 months	$1.17	$1.17	$0.00
$1.50	156,000	156,000	33 months	$1.50	$1.50	$0.00
$1.50	704,000	704,000	32 months	$1.50	$1.50	$0.00
$1.50	350,642	350,642	29 months	$1.50	$1.50	$0.00
$0.75-$2.00	58,000	58,000	25 months	$1.78	$1.78	$0.00
$2.00	725,721	725,721	22 months	$2.00	$2.00	$0.00
$0.75-2.00	3,650,000	3,650,000	19 months	$1.03	$1.03	$0.00
$3.00	170,000	170,000	12 months	$3.00	$3.00	$0.00
	30,433,289	30,433,289