Quarterly report pursuant to Section 13 or 15(d)

STOCK OPTIONS

v2.4.0.6
STOCK OPTIONS
 9 Months Ended
Nov. 30, 2011
STOCK OPTIONS [Abstract]  
STOCK OPTIONS

NOTE 5  STOCK OPTIONS


On June 6, 2007, the Board of Directors approved the issuance of 4,360,000 stock options to key employees and directors of the Company. The options have an expiration date of five years from the date of grant and an exercise price of $0.06 per share. Of the 4,360,000 stock options granted, 1,690,000 vested immediately and 890,000 stock options vest each succeeding year for three consecutive years.


The fair value of each option grant was calculated to be $.0272 on the date of grant using the Black-Schole Option pricing model with the following assumption used for grants during the applicable period.


   

Risk free rate

2.4%

Volatility

96.16%

Expected life

1.5 years

Dividend yield

0%


No expense was recorded in the three months or nine months ended November 30, 2011, nor will there be any future expense related to these stock options. All expenses were recorded semiannually based on vesting through June 2010.


The following table summarizes the Company's stock options:


               

 

 

 

 

 

 

WEIGHTED-AVERAGE

 

 

 

 

 

WEIGHTED-AVERAGE

 

REMAINING

 

OPTIONS

 

SHARES

 

EXERCISE PRICE

 

CONTRACTUAL TERM

 

 

 

 

 

 

 

 

 

Outstanding at February 28, 2011

 

2,150,000

 

$ 0.06

 

-

 

Granted

 

-

 

-

 

-

 

Exercised

 

(2,025,000

)

0.06

 

-

 

Forfeited or expired

 

-

 

-

 

-

 

Outstanding at November 30, 2011

 

125,000

 

$ 0.06

 

0.8

 

Exercisable at November 30, 2011

 

125,000

 

$ 0.06

 

0.8

 


In August 2011, the president and one director exercised stock options. Total intrinsic value of options exercised during the period ended August 31, 2011 was $546,750. The Company recorded an excess tax benefit to APIC related to share-based compensation in the amount of $202,076 at August 31, 2011.


The Company's remaining outstanding options are all fully vested.