NOTE 8 – SHAREHOLDERS’ EQUITY

Common Stock

During the three months ended May 31, 2016, we issued 950,000 shares of common stock were issued in settlement for a note payable balance $150,000 plus accrued interest of $15,288.

During the three months ended May 31, 2015, we did not issue any shares of common stock.

Employee Stock Options

During the Three months ended May 31, 2016, there were no stock options granted to employees.

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, 2016		$0.75-$1.00	$	0.00		7,224,000
Cancelled		-		-		-
Granted		-		-		-
Outstanding, May 31, 2016		$0.75-$1.00	$	0.00		7,224,000

The exercise prices for the options outstanding at May 31, 2016, 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

7,224,000

3.75 years

0.79

3.75 years

7,224,000

0.79

Warrants

Activity in issued and outstanding warrants is as follows:

	Number of Shares			Exercise Prices
Outstanding, February 29, 2016		36,726,208			$0.10-$1.50
Granted		-			-
Exercised		-			-
Cancelled		(1,657,188	)		$1.00-$1.50
Outstanding, May 31, 2016		35,069,020			$0.10-$1.50

There were no warrants issued in the three months ended May 31,2016.

The exercise prices for the warrants outstanding at May 31, 2016, 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
$0.10-$0.75		19,481,012		19,481,012	58 months	$	0.56	$	0.56	$	0.00
$0.75		1,082,734		1,082,734	57 months	$	0.75	$	0.75	$	0.00
$0.75		1,000,000		1,000,000	47 months	$	0.75	$	0.75	$	0.00
$0.75-$1.00		5,990,275		5,990,275	42 months	$	0.77	$	0.77	$	0.00
$1.00-$1.25		795,000		795,000	4 months	$	1.05	$	1.05	$	0.00
$1.00		6,719,999		6,719,999	3 months	$	1.00	$	1.00	$	0.00

		35,069,020		35,069,020