INCOME TAXES

12 Months Ended

Feb. 28, 2012

Notes to Financial Statements

INCOME TAXES

NOTE 6 - INCOME TAXES:

At February 29, 2012 and February 28, 2011, the Company had net operating loss carryforwards of approximately $23.3 million and $23.3 million, respectively, to offset future income subject to tax and approximately $441,000 and $441,000, respectively, of research tax credits available to offset future taxes payable. These resulted in an estimated $8.4 million and $8.4 million, respectively, of federal and $2.1 million and $2.1 million, respectively, of state deferred tax assets at February 29, 2012 and February 28, 2011. A full valuation allowance has been established for these deferred tax assets since their realization is considered unlikely. The difference between the tax provision at the federal corporation tax statuary rate and the rate (zero) included in the Company’s consolidated financial statements occurs because the Company has never had any taxable income nor the ability to utilize loss carryforwards.

Changes in the ownership of a majority of the fair market value of the Company's common stock would likely delay or limit the utilization of existing net operating loss carryforwards and credits. The Company believes, based upon limited analysis, that such changes may have occurred in 1993, 1997, 2000 and 2005. Such carryforwards and credits expire between 2013 and 2031.