Income Taxes

12 Months Ended

Feb. 28, 2021

Income Taxes

Note 7. Income Taxes

The rate reconciliation related to income taxes differs from the amount computed by applying the federal statutory rate of 21% is as follows (in thousands):

	Fiscal Year Ended
	February 28, 2021			February 29, 2020
Statutory U.S. federal income tax rate	$	177		$	(253	)
Permanent items		(205	)		2
State income taxes, net of federal benefit		(42	)		(15	)
Valuation allowance		76			336
Other		27			(70	)
Taxes at effective income tax rate	$	33		$	—

Significant components of the Company’s net deferred income tax assets consist of the following (in thousands):

	February 28,			February 29,
	2021			2020
Deferred tax assets (liabilities):
Federal net operating loss carry-forward	$	3,501		$	3,130
Non-deductible losses		—			1,365
State net operating loss carry-forward		871			808
Federal tax credit carry-forward		319			319
Inventory reserves		192			191
Uniform capitalization costs		112			101
Foreign tax credit carry-forward		73			73
Accrued liabilities		50			44
Basis of disposal		(170	)		—
Right of use assets		(271	)		—
Lease liabilities		278			—
Basis difference of property, plant and equipment		(3	)		39
Allowance for doubtful accounts		3			2
Amortization of intangibles		24			1
Other		(5	)		(9	)
Valuation allowance		(4,974	)		(6,064	)
Net deferred tax assets	$	—		$	—

Deferred tax assets have been reduced by a valuation allowance because, in the opinion of management, it is more likely than not that the Company’s deferred tax assets will not be realized. The Company has determined that a 100% valuation allowance is needed due to historical cumulative taxable net operating losses and the limited taxable income related to the carry back periods. The Company has available federal and state net operating loss carry forwards of $16.6 million and $14.9 million, for the fiscal years ending February 28, 2021 and February 29, 2020, respectively. The net operating loss carry forwards expire at various dates through fiscal 2041, if not used.