Income Taxes

9 Months Ended

Nov. 30, 2012

Income Taxes [Abstract]

INCOME TAXES:

6.           INCOME TAXES:

At November 30, 2012, the Company has net operating loss carryforwards of approximately $15,161,000 that expire through 2023.  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 carryforward.

Total net deferred taxes were comprised of the following as of November 30 and February 29, 2012:

Deferred tax assets:	11/30/12			2/29/12
Loss carryforwards	$	5,761,000		$	5,572,000
Allowance for doubtful accounts		1,000			35,000
Inventory allowance		920,000			690,000
Depreciation		(178,000	)		68,000
Section 263A capitalized costs		663,000			494,000
Total deferred tax assets		7,167,000			6,859,000
Valuation allowance		(7,167,000	)		(6,859,000	)
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 quarter ended November 30, 2012 and for the year ended February 29, 2012.

A reconciliation of the U.S. federal statutory tax rate to the Company’s effective tax rate for the quarter ended November 30, 2012 and for the year ended February 29, 2012 is as follows:

	11/30/12			2/29/12
U.S. federal statutory rate		34.0	%		34.0	%
Change in valuation allowance		(34.0	)		(34.0	)
Alternative minimum taxes		2.5			2.2
Effective income tax rate		2.5	%		2.2	%

On June 11, 2012, the Company made an estimated tax payment of $4,000 toward its fiscal year 2013 federal income tax obligation.