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INCOME TAXES
 12 Months Ended
Feb. 29, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 9: INCOME TAXES

 

The annual provision (benefit) for income taxes differs from amounts computed by applying the maximum U.S. Federal income tax rate of 21% to pre-tax income as follows:

   February 29,
2024		   February 28,
2023		 
Expected federal income tax  $366,362   $165,882 
State tax, net of federal   52,510    37,204 
Research and development tax credits   (161,525)   (127,329)
Permanent differences   45,770    78,252 
Income tax expense  $303,117   $154,009 

 

Components of the current and deferred tax expense are as follows:

   February 29,
2024		   February 28,
2023		 
Current:          
Federal  $716,003   $438,263 
State   123,743    83,525 
Total current income tax   839,746    521,788 
           
Deferred:          
Federal   (471,396)   (321,458)
State   (65,233)   (46,321)
Total deferred income tax   (536,629)   (367,779)
           
Income tax expense  $303,117   $154,009 

 

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 not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and projections for future taxable income over periods in which the deferred tax assets are deductible. Management believes it is more likely than not that the Company will realize the benefits of these deductible differences.

 

The incorporation of the new tax laws for 2023, requires the Company to capitalize for income tax purposes research and development expenses incurred during the year and for such expenses to be amortized over a five year period. As a result, a deferred tax asset “Capitalized R&D expenses – IRC Section 174” has been recorded.

 

The Company does not have any uncertain tax positions in 2024. There are no interest and penalties related to uncertain tax positions in 2024. As of February 29, 2024, open years related to the federal and state jurisdictions are 2023, 2022 and 2021.

 

The deferred tax asset and liability are comprised of the following:

   February 29,
2024		   February 28,
2023		 
Deferred tax asset          
Allowance for inventory  $91,000   $76,000 
Allowance for accounts receivable   3,000    3,000 
Capitalized R&D expenses – IRC Section 174   985,000    441,000 
Accrued expenses and other   177,000    147,000 
Deferred tax asset – Long Term  $1,256,000   $667,000 
           
Deferred tax liability          
Building and leasehold depreciation   (230,000)   (83,000)
Deferred tax liability – Long Term  $(230,000)  $(83,000)