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INVENTORIES

3 Months Ended

May 31, 2014

NOTE 3 – INVENTORIES

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

	May 31, 2014			February 28, 2014

Raw materials	$	1,856,082		$	1,808,556
Finished goods		1,596,838			1,735,019

		3,452,920			3,543,575
Reserve for potential product obsolescence		(2,307,527	)		(2,334,487	)
Discount on long term inventory		(8,724	)		(78,051	)

		1,136,669			1,131,037
Non-current portion		(136,669	)		(131,037

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 $2,307,527 and $2,334,487 as of May 31, 2014 and February 28,

2014, respectively. Management has also recorded a discount on long term inventory of $8,724 and $78,051 as of May 31, 2014 and February 28, 2014, 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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