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INVENTORIES

9 Months Ended

Nov. 30, 2012

NOTE 3 – INVENTORIES

Inventories, stated at the lower of cost (first in first out), or market consisted of the following:

	November 30, 2012			February 29, 2012

Raw materials	$	1,964,797		$	1,812,523
Finished goods		1,844,786			2,354,543

		3,809,583			4,167,066
Reserve for potential product obsolescence		(1,277,148	)		(1,460,683	)
Discount on long term inventory		(91,946	)		(102,383	)

		2,440,489			2,604,000
Non-current portion		1,440,489			(1,604,000	)

Current portion	$	1,000,000		$	1,000,000

We assessed the net realize-ability and the related potential obsolescence of inventory. In accordance with this assessment, management has recorded a reserve of $1,277,148 and $1,460,683 as of November 30, 2012 and February 29, 2012, respectively. Management has also recorded a discount on long term inventory of $91,946 and $102,383 as of November 30, 2012 and February 29, 2012, respectively.

- Definition

The entire disclosure for inventory. This may include, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the major classes of inventory, and the nature of the cost elements included in inventory. If inventory is stated above cost, accrued net losses on firm purchase commitments for inventory and losses resulting from valuing inventory at the lower-of-cost-or-market may also be included. For LIFO inventory, may disclose the amount and basis for determining the excess of replacement or current cost over stated LIFO value and the effects of a LIFO quantities liquidation that impacts net income.

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