9 INCOME TAXES

12 Months Ended

Feb. 29, 2016

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 9:   INCOME TAXES

Income tax expense (benefit) consists of the following:

	Current		Deferred			Total
Year ended February 29, 2016:
U.S. federal	$	256,530		548,162			804,692
State		57,973		96,734			154,708
Total income tax expense (benefit)	$	314,503		644,896			959,399
Year ended February 28 2015:
U.S. federal	$	—		(633,032	)		(633,032	)
State		20,729		(112,687	)		(91,958	)
Total income tax expense	$	20,729		(745,719	)		(724,990	)

The income tax expense (benefit) differs from the expected amount of income tax expense (benefit) determined by applying a combined U.S. federal and state income tax rate of 40% to pretax income (loss) for the years ended February 29, 2016 and February 28, 2015 as follows:

	2016			2015
Expected tax expense (benefit)	$	815,617		$	(846,350	)
Permanent differences		13,255			5,149
Forfeiture of warrants (Note 8)		140,870			-
True up of state tax payable		(27,803	)		(7,014	)
Change in valuation allowance		17,460			123,225
Income tax expense (benefit)	$	959,399		$	(724,990	)

Deferred tax assets are as follows:

	February 29,			February 28,
	2016			2015
Deferred tax assets:
NOL carryforwards	$	-		$	631,027
Depreciation		29,725			(15,484	)
Accrued expenses		160,027			88,556
Stock compensation		564,626			611,315
Other		-			48,963
Valuation allowance		(140,655	)		(123,225	)
Net deferred tax assets	$	613,716		$	1,241,152

The valuation allowance for deferred tax assets as of February 29, 2016 and February 28, 2015 $140,655 and $123,225, respectively.  The net change in the total valuation allowance was an increase of $17,400 and $123,225 for the years ended February 29, 2016 and February 28, 2015, respectively. In assessing the realization of deferred tax assets, management considers whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.  Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment.  

As of February 29, 2016, the Company had utilized all NOL carryforwards for federal and state purposes, respectively. As of February 28, 2015, the Company had approximately $1.6 million and $1.7 million of NOL carryforwards for federal and state purposes, respectively.

The Company includes interest and penalties, if any, arising from the underpayment of income taxes in the consolidated statements of operations in the provision for income taxes. As of February 29, 2016 and February 28, 2015, the Company had no accrued interest or penalties related to uncertain tax positions. The tax years that remain subject to examination by major taxing jurisdictions are fiscal years 2012 through 2015 for federal purposes and fiscal years 2011 through 2015 for state purposes.