NOTE 5 – SHAREHOLDERS’ EQUITY

Common Stock

During the six months ended August 31, 2018, we issued 2,256,444 shares of common stock, valued at $2,280,964 to BetterSea LLC, a greater than 15% shareholder as part of the restructuring agreement. We issued an additional 5,108,291 shares of common stock valued at $1,992,251 to BetterSea LLC as a settlement for disputes.

During the six months ended August 31, 2018, we issued 742,857 warrants to members of our board of directors. The warrants have a term of five years and an exercise price of $1.40. The company recorded an expense of $312,072 for the issuance of these warrants. During the six months ended August 31, 2018, we re-priced to $1.40 all outstanding employee options and warrants that had a previous exercise price greater than $1.40. The company recorded an expense of $105,352 as a result of the re-pricing.

Duringthe six months ended August 31, 2017, we issued 5,000,000 (714,268 shares post reverse split) shares of common stock for $1,000,000 in conjunction with our Chinese Joint Venture, we issued 5,116,959 (730,995 shares post reverse split) shares of common stock valued at $665,204 as part of a settlement agreement, and we issued 2,500,000 (357,142 shares post reverse split) shares of common stock valued at $325,000 in connection with a consulting agreement.

Employee Stock Options

During the six months ended August 31, 2018, there were no stock options granted to employees and 742,857 stock options with an exercise price of $1.40 per share granted to directors, which are set forth below under “Warrants.”

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, 2018	$	1.40	$	0.00		1,032,000
Cancelled				-
Granted		-		-		-
Outstanding, August 31, 2018	$	1.40	$	0.00		1,032,000

The exercise prices for the options outstanding at August 31, 2018, 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

$1.40

1,032,000

1.5 years

1.40

1.5 years

1,032,000

1.40

Warrants

Activity in issued and outstanding warrants is as follows:

	Number of Shares		Exercise Prices
Outstanding, February 28, 2018		8,743,505		$0.70-$1.40
Granted		742,857	$	1.40
Exercised		-		-
Cancelled
Outstanding, August 31, 2018		9,486,362		$0.70-$1.40

The exercise prices for the warrants outstanding at August 31, 2018, 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
$1.40		742,857		742,857	55 months	$	1.40	$	1.40	$	0.00
$1.40		5,154,646		5,154,646	54 months	$	1.40	$	1.40	$	0.00
$0.70-$1.40		2,783,002		2,783,002	31 months	$	1.20	$	1.20	$	0.00
$1.40		154,666		154,666	30 months	$	1.40	$	1.40	$	0.00
$1.40		651,191		651,191	17 months	$	1.40	$	1.40	$	0.00

		9,486,362		9,486,362