Income Taxes

6 Months Ended

Aug. 31, 2011

Income Taxes [Abstract]

Income Taxes

H. Income Taxes

     In accordance with ASC 740, Accounting for Income Taxes, the Company has determined that there was sufficient uncertainty surrounding the future realization of its deferred tax assets to warrant the recording of a full valuation allowance. The valuation allowance was recorded based upon the Company’s determination that there was insufficient objective evidence, at this time, to recognize those assets for financial reporting purposes. For the period ended August 31, 2011, the Company has not changed its assessment regarding the recoverability of its deferred tax assets. Ultimate realization of the benefit of the deferred tax assets is dependent upon the Company generating sufficient taxable income in future periods, including periods prior to the expiration of certain underlying tax credits.

     The Company recorded a tax provision of approximately $15 thousand for minimum taxes in various U.S. States and income taxes with respect to the Company’s operations in Mexico. No provision for income taxes was recorded in the prior period presented due to the significance of the Company’s net loss.

     The tax years 2007 through 2010 remain open to examination by the major taxing jurisdictions to which the Company is subject. However, the amount of a net operating loss carryforward can be adjusted for federal tax purposes for the three years (four years for the major state jurisdictions in which the Company operates) after the net operating loss is utilized.

Unrecognized Tax Benefits

     The Company is subject to income taxes in the United States and Mexico. Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves are established when the Company believes that certain positions might be challenged despite a belief that its tax return positions are fully supportable. The Company adjusts these reserves in light of changing facts and circumstances, such as the outcome of income tax audits. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate. Accruals for unrecognized tax benefits are provided for in accordance with the requirements of the prescribed authoritative guidance. At August 31, 2011 and February 28, 2011, there were no unrecognized tax benefits.

Management does not anticipate that there will be a material change in the balance of unrecognized tax benefits within the next 12 months.

     The Company recognizes accrued interest and penalties related to uncertain tax positions in income tax expense. At August 31, 2011 and February 28, 2011, there were no accrued interest and penalties related to uncertain tax positions.