NOTE 5 – SHAREHOLDERS’ EQUITY

Common Stock

During the six months ended August 31, 2017, we issued 5,000,000 shares of common stock for $1,000,000 in conjunction with our Chinese Joint Venture, we issued 5,116,959 shares of common stock valued at $665,204 as part of a settlement agreement, and we issued 2,500,000 shares of common stock valued at $325,000 in connection with a consulting agreement.

During the six months ended August 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.

Employee Stock Options

During the Six months ended August 31, 2017, 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 28, 2017		$0.75-$1.00	$	0.00		7,224,000
Cancelled		-		-		-
Granted		-		-		-
Outstanding, August 31, 2017		$0.75-$1.00	$	0.00		7,224,000

The exercise prices for the options outstanding at August 31, 2017, 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

2.50 years

0.79

2.50 years

7,224,000

0.79

Warrants

Activity in issued and outstanding warrants is as follows:

	Number of Shares		Exercise Prices
Outstanding, February 28, 2017		27,554,021		$0.10-$1.00
Granted		1,400,000	$	.20
Exercised		-		-
Cancelled		-		-
Outstanding, August 31, 2017		28,954,021		$0.10-$1.00

The exercise prices for the warrants outstanding at August 31, 2017, 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
$0.20		1,400,000		1,400,000		54 months	$	0.20	$	0.20	$	0.00
$0.10-$0.75		19,481,012		19,481,012		43 months	$	0.56	$	0.56	$	0.00
$0.75		1,082,734		1,082,734		42 months	$	0.75	$	0.75	$	0.00
$0.75		1,000,000		1,000,000		32 months	$	0.75	$	0.75	$	0.00
$0.75-$1.00		5,990,275		5,990,275		27 months	$	0.77	$	0.77	$	0.00

		28,954,021		28,954,021