Income taxes

12 Months Ended

Feb. 28, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 10 – INCOME TAXES

The Company recorded an income tax expense of $800 attributable to the Fiscal 2021 state franchise taxes being unpaid. In Fiscal 2020, the Company recorded a total of $4,000 in unpaid state franchise taxes for fiscal years 2016 to 2020.

	2021		2020
Current:
Federal	$	-	$	5,880
State		800		4,000
Total		800		9,880
Deferred:
Federal		-		-
State		-		-
Total	$	-	$	-
Total Provision	$	800	$	9,880

The Company has provided full valuation allowance for the deferred tax assets on the expected future tax benefits from the net operating loss carry forwards as the management believes it is more likely than not that these assets will not be realized in the near future.

	2021			2020
Expected tax benefit		21	%		21	%
State tax benefit, net of federal benefit		7	%		7	%
Changes in valuation allowance		-28	%		-28	%
Total		0	%		0	%

The following table summarizes the significant components of our deferred tax asset at February 28, 2021 and February 29, 2020:

	2021			2020
Deferred tax asset
Primarily relating to net operating loss carry-forwards, but also reserves for inventory and accounts receivable, stock-based compensation and other	$	38,104,000		$	40,984,000
Valuation allowance		(38,104,000	)		(40,984,000	)
Net deferred tax asset	$	-		$	-

We recorded an allowance of 100% for deferred tax assets due to the uncertainty of its realization.

At February 28, 2021, we had operating loss (NOL) carry-forwards of approximately $167,200,000 for federal purposes, of which $164,600,000 may be available to reduce future years’ taxable income through 2037, and $2,600,000 may be available to offset future taxable income indefinitely. There is approximately $42,800,000 for state purposes, which expire through 2039.

We follow FASB ASC 740 related to uncertain tax positions. Under FASB ASC 740, the impact of an uncertain tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. At February 28, 2021 and February 29, 2020, we have no unrecognized tax benefits.

Our continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of February 28, 2021, and February 29, 2020, we have no accrued interest and penalties related to uncertain tax positions.

We are subject to taxation in the U.S. and California. Our tax years for 2014 and forward are subject to examination by our tax authorities. We are not currently under examination by any tax authority.

The Company has failed to file its California tax returns for the years ended February 28, 2015 thru February 28, 2021 due to its inability to pay the minimum annual franchise tax payment of $800. The tax provision for Fiscal 2020 includes an accrual for the California minimum franchise tax amounts for five-years from 2016 to 2021, or $4,800.