NOTE 5 – SHAREHOLDERS’ EQUITY

Common Stock

During the nine months ended November 30, 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 nine months ended November 30, 2016, we issued 950,000 shares of common stock as a settlement for a note payable balance of $150,000 plus accrued interest of $15,288.

Employee Stock Options

During the nine months ended November 30, 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, November 30, 2017		$0.75-$1.00	$	0.00		7,224,000

The exercise prices for the options outstanding at November 30, 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

2.25 years

0.79

2.25 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		26,454,021		$0.10-$1.00
Granted		1,400,000	$	.20
Exercised		-		-
Cancelled		406,941		1.00
Outstanding, November 30, 2017		27,447,080		$0.10-$1.00

The exercise prices for the warrants outstanding at November 30, 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		51 months	$	0.20	$	0.20	$	0.00
$0.10-$0.75		18,381,012		18,381,012		41 months	$	0.55	$	0.41	$	0.00
$0.75		1,082,734		1,082,734		39 months	$	0.75	$	0.75	$	0.00
$0.75		1,000,000		1,000,000		29 months	$	0.75	$	0.75	$	0.00
$0.75-$1.00		5,583,334		5,583,334		26 months	$	0.75	$	0.75	$	0.00

		27,447,080		27,447,080