NOTE 9:   INCOME TAXES

Income tax expense (benefit) consists of the following:

The income tax expense (benefit) differs from the expected amount of income tax expense (benefit) determined by applying a combined U.S. federal and state income tax rate of 40% to pretax income (loss) for the years ended February 28, 2017 and February 29, 2016 as follows:

Deferred tax assets are as follows:

The valuation allowance for deferred tax assets as of February 28, 2017 and February 29, 2016 $1,222,653 and $140,655, respectively.  The net change in the total valuation allowance was an increase of $1,081,998 and $17,400 for the years ended February 28, 2017 and February 29, 2016, respectively. In assessing the realization 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 (including the impact of available carryback and carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment.  It was determined that it was more likely than not that a full valuation allowance was necessary as of February 28, 2017.

The Company includes interest and penalties, if any, arising from the underpayment of income taxes in the consolidated statements of operations in the provision for income taxes. As of February 28, 2017 the Company had no accrued interest or penalties related to uncertain tax positions. The tax years that remain subject to examination by major taxing jurisdictions are fiscal years 2013 through 2016 for federal purposes and fiscal years 2012 through 2016 for state purposes.