Income Taxes

12 Months Ended

Feb. 28, 2013

Income Taxes [Abstract]

INCOME TAXES

8.  INCOME TAXES

At February 28, 2013, the Company has net operating loss carryforwards of approximately $15,161,000 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 fully 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 28, 2013 and February 29, 2012:

Deferred Tax Asset (Liability):	2013			2012
Current
Allowance for doubtful accounts	$	1,000		$	35,000
Inventory allowance		831,000			690,000
Section 263A capitalized costs		389,000			494,000
Total current deferred tax assets		1,221,000			1,219,000
Valuation allowance		(1,221,000	)		(1,219,000	)
	$	0		$	0
Long-term
Loss carryforwards	$	5,330,000		$	5,572,000
Depreciation		(58,000	)		68,000
Total long-term deferred tax assets		5,272,000			5,640,000
Valuation allowance		(5,272,000	)		(5,640,000	)
	$	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 28, 2013 and February 29, 2012.

A reconciliation of the U.S. federal statutory tax rate to the Company’s effective tax rate for fiscal year ended February 28, 2013 and February 29, 2012 is as follows:

	2013			2012
U.S. federal statutory rate		34.0	%		34.0	%
Change in valuation allowance		(34.0	)		(34.0	)
Alternative Minimum Taxes		1.0			2.2
Effective income tax rate		1.0	%		2.2	%