Income Taxes

12 Months Ended

Feb. 29, 2024

Income Tax Disclosure [Abstract]

Income Taxes

8)Income Taxes

The components of income (loss) before the provision (benefit) for income taxes are as follows:

	Year Ended			Year Ended			Year Ended
	February 29, 2024			February 28, 2023			February 28, 2022
Domestic Operations	$	(36,128	)	$	(33,501	)	$	(26,665	)
Foreign Operations		(11,249	)		2,551			826
	$	(47,377	)	$	(30,950	)	$	(25,839	)

The provision (benefit) for income taxes is comprised of the following:

	Year Ended			Year Ended			Year Ended
	February 29, 2024			February 28, 2023			February 28, 2022
Current provision (benefit)
Federal	$	(231	)	$	254		$	20
State		72			242			804
Foreign		811			1,248			2,148
Total current provision	$	652		$	1,744		$	2,972
Deferred (benefit) provision
Federal	$	(721	)	$	(394	)	$	(2,300	)
State		(520	)		(271	)		1,010
Foreign		(1,196	)		(1,118	)		(56	)
Total deferred (benefit) provision	$	(2,437	)	$	(1,783	)	$	(1,346	)
Total (benefit) provision
Federal	$	(952	)	$	(140	)	$	(2,280	)
State		(448	)		(29	)		1,814
Foreign		(385	)		130			2,092
Total (benefit) provision	$	(1,785	)	$	(39	)	$	1,626

The effective tax rate before income taxes varies from the current statutory U.S. federal income tax rate as follows:

	Year Ended					Year Ended					Year Ended
	February 29, 2024					February 28, 2023					February 28, 2022
Tax benefit at Federal statutory rates	$	(9,949	)	21.0	%	$	(6,499	)	21.0	%	$	(5,426	)	21.0	%
State income taxes, net of Federal benefit		(692	)	1.5			(711	)	2.3			(282	)	1.1
Change in valuation allowance		6,589		(13.9	)		5,785		(18.7	)		7,214		(28.0	)
Change in tax reserves		(183	)	0.4			(173	)	0.5			(227	)	0.9
Non-controlling interest		463		(1.0	)		476		(1.5	)		766		(3.0	)
U.S. effects of foreign operations		-		—			379		(1.2	)		(2,135	)	8.3
Permanent differences and other		195		(0.4	)		794		(2.6	)		581		(2.2	)
Capital loss carryforward expiration		3,464		(7.3	)		-		-			-		-
Foreign rate differential		(879	)	1.9			402		(1.3	)		787		(3.1	)
Change in tax rate		(255	)	0.5			39		(0.1	)		105		(0.4	)
Research & development credits		(538	)	1.1			(531	)	1.7			243		(0.9	)
Effective tax rate	$	(1,785	)	3.8	%	$	(39	)	0.1	%	$	1,626		(6.3	)%

Permanent differences and other include nondeductible expenses, Section 162(m) limitation on executive compensation, and other adjustments.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying values of assets and liabilities for financial reporting and tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:

	February 29, 2024			February 28, 2023
Deferred tax assets:
Accounts receivable	$	-		$	192
Inventory		3,732			4,196
Property, plant and equipment		3,092			2,467
IRC Section 174 - Capitalized R&D		5,171			3,735
Interim arbitration award		-			10,453
Operating lease		675			811
Accruals and reserves		3,018			6,097
Deferred compensation		205			268
Warranty reserves		1,198			1,465
Unrealized gains and losses		1,337			4,877
Partnership investments		3,904			3,262
163(j) interest limitation		1,786			-
Net operating losses		22,881			5,270
Foreign tax credits		2,111			1,739
Other tax credits		6,334			5,344
Deferred tax assets before valuation allowance		55,444			50,176
Less: valuation allowance		(41,845	)		(35,421	)
Total deferred tax assets		13,599			14,755
Deferred tax liabilities:
Intangible assets		(12,858	)		(16,035	)
Prepaid expenses		(1,295	)		(1,513	)
Operating lease		(652	)		(798	)
Deferred financing fees		(32	)		(46	)
Total deferred tax liabilities		(14,837	)		(18,392	)
Net deferred tax liability	$	(1,238	)	$	(3,637	)

In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those periods in which temporary differences become deductible and/or net operating loss carryforwards can be utilized. We consider the level of historical taxable income, scheduled reversal of temporary differences, tax planning strategies, and projected future taxable income in determining whether a valuation allowance is warranted. Significant weight is given to positive and negative evidence that is objectively verifiable.

The Company evaluates the realizability of deferred tax assets on a jurisdictional basis at each reporting date. Accounting for income taxes requires that a valuation allowance be established when it is more likely than not that all or a portion of the deferred tax assets will not be realized. In circumstances where there is sufficient negative evidence indicating that the deferred tax assets are not more likely than not realizable, we establish a valuation allowance. In addition, the Company maintains a valuation allowance against deferred tax assets in certain foreign jurisdictions. The Company's valuation allowance increased by $6,424 during the year ended February 29, 2024. Any further increase or reduction in the valuation allowance could have a favorable or unfavorable impact on our income tax provision and net income in the period in which such determination is made.

Notwithstanding the U.S. taxation of the deemed repatriated foreign earnings as a result of the one-time transition tax during Fiscal 2018, the Company intends to continue to invest these earnings indefinitely outside the U.S. If these future earnings are repatriated to the U.S., or if the Company determines that such earnings will be remitted in the foreseeable future, the Company may be required to accrue U.S. deferred

taxes (if any) and applicable withholding taxes. It is not practicable to estimate the tax impact of the reversal of the outside basis difference, or the repatriation of cash due to the complexity of its hypothetical calculation.

As of February 29, 2024, the Company has foreign tax credits of $1,424 which expire in tax years 2027 through 2032. The Company has federal research and development tax credits of $5,083 which expire in tax years 2035 through 2043. The Company has a federal net operating loss carryforward of $48,061 that can be carried forward indefinitely and can only offset 80% of taxable income. The Company has various foreign net operating loss carryforwards, state net operating loss carryforwards, and state tax credits that expire in various years and amounts through tax year 2043.

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows:

Balance at February 28, 2021	$	6,860
Additions based on tax positions taken in the current and prior years		140
Settlements		—
Decreases based on tax positions taken in the prior years		(563	)
Other		(172	)
Balance at February 28, 2022	$	6,265
Additions based on tax positions taken in the current and prior years		114
Settlements		—
Decreases based on tax positions taken in the prior years		(484	)
Other		89
Balance at February 28, 2023	$	5,984
Additions based on tax positions taken in the current and prior years		452
Settlements		—
Decreases based on tax positions taken in prior years		(995	)
Other		184
Balance at February 29, 2024	$	5,625

Of the amounts reflected in the table above at February 29, 2024, $5,625, if recognized, would reduce our effective tax rate. If recognized, $4,958 of the unrecognized tax benefits are likely to attract a full valuation allowance, thereby offsetting the favorable impact to the effective tax rate. Our unrecognized tax benefit non-current consolidated balance sheet liability, including interest and penalties, is $809. The Company records accrued interest and penalties related to income tax matters in the provision for income taxes in the accompanying Consolidated Statements of Operations and Comprehensive Loss. For the years ended February 29, 2024, February 28, 2023 and February 28, 2022, interest and penalties on unrecognized tax benefits were $(52), $(5) and $(28), respectively. The balance as of February 29, 2024 and February 28, 2023 was $142 and $194, respectively. It is reasonably possible that unrecognized tax benefits will decrease by approximately $400 within the next 12 months.

The Company, or one of its subsidiaries, files its tax returns in the U.S. and certain state and foreign income tax jurisdictions with varying statutes of limitations. The earliest years' tax returns filed by the Company that are still subject to examination by the tax authorities in the major jurisdictions are as follows:

Jurisdiction	Tax Year
U.S.	2019
Netherlands	2018
Germany	2019