Income Taxes

9 Months Ended

Nov. 30, 2015

Income Taxes [Abstract]

INCOME TAXES

5. INCOME TAXES

At November 30, 2015, the Company has net operating loss carryforwards of approximately $10,122,000 that expire through February 2029. 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 November 30, 2015 and February 28, 2015:

	November 30,			February 28,
	2015			2015
Deferred Tax Asset (Liability):
Current
Allowance for doubtful accounts	$	1,000		$	1,000
Inventory allowance		1,197,000			1,044,000
Section 263A capitalized costs		113,000			85,000
Total current deferred tax assets		1,311,000			1,130,000
Valuation allowance		(1,311,000	)		(1,130,000	)
	$	0		$	0
Long-term
Loss carryforwards	$	3,959,000		$	3,959,000
Depreciation		(41,000	)		(31,000	)
Total long-term deferred tax assets		3,918,000			3,928,000
Valuation allowance		(3,918,000	)		(3,928,000	)
	$	0		$	0

The change in the valuation allowance on deferred tax assets is due principally to the changes between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carryforwards. A reconciliation of the U.S. federal statutory tax rate to the Company’s effective tax rate for the quarter ended November 30, 2015 and for the year ended February 28, 2015 is as follows:

	November 30,			February 28,
	2015			2015
U.S. federal statutory rate		34.0	%		34.0	%
Change in valuation allowance		(34.0	)		(34.0	)
Alternative minimum taxes		-			2.0
Effective income tax rate		0	%		2.0	%