INCOME TAXES

12 Months Ended

Feb. 29, 2012

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

8. INCOME TAXES

At February 29, 2012, the Company has net operating loss carryforwards of approximately $14,662,000 that expire through 2031. Such net operating losses are available to offset future taxable income, if any. As the utilization of such net operating losses for tax purposes is not assured, the deferred tax asset has been mostly reserved through the recording of a 100% valuation allowance. Should a cumulative change in the ownership of more than 50% occur within a three-year period, there could be an annual limitation on the use of the net operating loss carryforwards.

Total net deferred taxes are comprised of the following at February 29, 2012 and February 28, 2011:

Deferred tax assets:	2012			2011
Loss carryforwards	$	5,572,000		$	6,064,000
Allowance for doubtful accounts		35,000			1,000
Inventory allowance		690,000			853,000
Depreciation		68,000			49,000
Section 263A capitalized costs		494,000			296,000
Total deferred tax assets		6,859,000			7,263,000
Valuation allowance		(6,859000	)		(7,263,000	)
Total net deferred taxes	$	0		$	0

The change in the valuation allowance on deferred tax assets is due principally to the utilization of the net operating loss for the years ended February 29, 2012 and February 28, 2011.

A reconciliation of the U.S. federal statutory tax rate to the Company’s effective tax rate for fiscal year ended February 29, 2012 and 2011 is as follows:

	2012			2011
U.S. federal statutory rate		34.0	%		34.0	%
Change in valuation allowance		(34.0	)		(34.0	)
Alternative Minimum Taxes		2.2			0.9
Effective income tax rate		2.2	%		0.9	%