Income Taxes

12 Months Ended

Feb. 28, 2021

Income Tax Disclosure [Abstract]

Income Taxes

9. Income Taxes

The following table reconciles the U.S. federal statutory income tax rate in effect for the years ended February 28, 2021 February 29, 2020, and the Company’s effective tax rate:

	Year Ended February 28, 2021			Year Ended February 29, 2020
U.S. federal statutory income tax	$	(1,240,198	)	$	(1,184,603	)
Meals & Entertainment		3,947			8,190
Stock expense related to warrant modifications		569,135			-
True-up of prior year permanent items		417,242			-
Change in valuation allowance		249,874			1,176,413
Effective income tax rate	$	-		$	-

The significant components of deferred income tax assets and (liabilities) at February 28, 2021 and February 29, 2020 are as follows:

	February 28, 2021			February 29, 2020
Capitalized geological/geophysical & other intangibles	$	8,285		$	20,402
Debt discount & related amortization		486,060			16,562
Federal net operating loss		1,709,147			1,916,654
Less: valuation allowance		(2,203,492	)		(1,953,618	)
Net deferred tax asset	$	-		$	-

The amount taken into income as deferred income tax assets must reflect that portion that is more likely-than-not to be realized from future operations. The Company has chosen to provide a full valuation allowance against net deferred tax assets. The Company has recognized a valuation allowance for the net deferred income tax asset since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years. The valuation allowance is reviewed annually. When circumstances change and which cause a change in management’s judgment about the realize-ability of deferred income tax assets, the impact of the change on the valuation allowance is generally reflected in current income.

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. Management has considered the likelihood and significance of possible penalties associated with its current and intended filing positions and has determined, based on their assessment, that such penalties, if any, would not be expected to be material.

No provision for income taxes has been provided in these financial statements due to the net loss for the years ended February 28, 2021 and February 29, 2020. An NOL carryforward of $8,138,797 has accumulated as of February 28, 2021 with portions beginning to expire in 2032, of which under the CARES Act a portion can be carried back up to five years but also, can be carried forward indefinitely, limited to 80% of a given year’s taxable income. NOLs may be limited for future use to the extent there has been a Section 382 limitation resulting from a certain percentage ownership change in a year or years. At this time, Management has not determined whether the threshold ownership change has occurred for any year, or whether a Section 382 limitation applies.

The Company currently has tax returns open for examination by the Internal Revenue Service for all years since fiscal year 2018.