Income Taxes

3 Months Ended

May 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

(13) Income Taxes

The Company’s provision for income taxes consists of federal, foreign, and state taxes necessary to align the Company’s year-to-date tax provision with the annual effective rate that it expects to achieve for the full year. At each interim period, the Company updates its estimate of the annual effective tax rate and records cumulative adjustments, as necessary.

For the three months ended May 31, 2024, the Company recorded an income tax benefit of $594, which includes a discrete income tax benefit of $107 related to the reversal of uncertain tax position liabilities as a result of the lapse of the applicable statute of limitations.

The effective tax rate for the three months ended May 31, 2024 was an income tax benefit of 5.5% on pre-tax loss of $10,771. The effective tax rate for the three months ended May 31, 2024 differed from the U.S. statutory rate of 21% as a result of a number of factors, including the non-controlling interest related to EyeLock LLC, state and local income taxes, nondeductible permanent differences, income taxed in foreign jurisdictions at varying tax rates, and a reduction in valuation allowance based on forecasted earnings.

For the three months ended May 31, 2023, the Company recorded an income tax benefit of $1,321, which includes a discrete income tax benefit of $432 related primarily to the reversal of uncertain tax position liabilities as a result of the lapse of the applicable statute of limitations and adjustments to the valuation allowance.

The effective tax rate for the three months ended May 31, 2023 was an income tax benefit of 10.1% on pre-tax loss of $13,026. The effective tax rate for the three months ended May 31, 2023 differs from the U.S. statutory rate of 21% as a result of a number of factors, including the non-controlling interest related to EyeLock LLC, state and local income taxes, nondeductible permanent differences, income taxed in foreign jurisdictions at varying tax rates, and a reduction in valuation allowance based on forecasted earnings.

At May 31, 2024 and February 29, 2024, the Company had an uncertain tax position liability balance of $706 and $809, respectively, including interest and penalties. The unrecognized tax benefits include amounts related to various U.S. federal, state, and local, and foreign tax issues.