v3.26.1
13. Income taxes
 12 Months Ended
Feb. 28, 2026
Income Tax Disclosure [Abstract]  
13. Income taxes 13.    Income taxesa. Provision for income taxes      

The components of income tax expense are as follows: 

                 
   2026  2025
Current expense from income taxes:          
Federal   —      17,666 
State     —         1,525  
Foreign     (398,703 )     (756,580 )
Total current expense from income taxes     (398,703 )     (737,389 )
                 
Deferred benefit (expense) from income taxes                
Federal     —         —    
State     —         —    
Foreign     124,018       (127,276 )
Total deferred benefit (expense) from income taxes     124,018       (127,276 )
                 
Total   $ (274,685 )   $ (864,665 )

 

The following table sets forth a reconciliation from the U.S statutory federal income tax rate to the effective income tax rate:

 

   2026  2025
Federal income tax rate   21%   21%
Permanent differences   (9%)   (4%)
State taxes   0%   0%
Valuation allowance   5%   5%
Foreign rate differential   9%   7%
Other   0%   0%
Effective rate   26%   29%

b.       Deferred taxes/Future income tax assets and valuation allowance  
     

The following table sets forth the significant components of deferred tax assets and liabilities:

                 
  

2026

$

 

2025

$

Deferred tax assets          
Leave pay provision   2,079    1,244 
Provision for stock obsolescence   13,083    2,166 
Provision for bad debt   22,189    17,504 
Unrealized profit
inventory		   24,147    24,503 
Provision for royalties   7,077    4,445 
Commission accrual   6,497    383 
Impairment of note receivable   172,368    173,803 
Foreign tax credits   487,591    264,820 
Net operating loss - State   21,647    6,066 
Advanced income   —      12,661 
Lease liabilities   4,025    38,234 
Total deferred tax assets   760,703    545,829 
Less valuation allowance   (708,368)   (462,576)
Deferred tax assets, net   52,335    83,253 
           
Deferred tax liabilities:          
Right-of-use assets   (3,478)   (37,302)
Uninvoiced revenue GAAP adjustment   —      (126,075)
Total deferred tax liabilities   (3,478)   (163,377)
Deferred tax assets/(liabilities), net   48,857    (80,124)

 

 

Deferred tax assets refer to assets that are attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets in essence represent future savings of taxes that would otherwise be paid in cash. The realization of the deferred tax assets is dependent upon the generation of sufficient future taxable income, including capital gains. If it is determined that the deferred tax assets cannot be realized, a valuation allowance must be established, with a corresponding charge to net income. It is management’s estimate that certain deferred tax assets will be utilized in full in the next 12 months.

 

c. Other

 

The geographic components of income before income taxes consisted of the following for the years ended February 28, 2026 and February 28, 2025:

 

   2026  2025
United States operations   (484,832)   (248,501)
International operations   1,554,019    3,272,639 
Income before taxes   1,069,187    3,024,138 

 

No U.S. federal tax has been provided on the undistributed earnings of the foreign subsidiaries as of February 28, 2026 as the company intends to permanently reinvest the earnings. As of February 28, 2025, the Company has no liabilities for uncertain tax positions. It is the Company’s policy to record interest and penalties as a component of tax expense. The Company files income tax returns in the U.S. Federal jurisdiction, various U.S. state jurisdictions and South Africa. With few exceptions, the fiscal years that remain subject to examination are February 28, 2025 through February 28, 2026.

 

In October 2021, the Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework released a two-pillar solution to address the tax challenges of the digital economy. Pillar Two introduces a global minimum corporate tax regime that applies to multinational enterprises (MNEs) with annual consolidated revenue of €750 million or more.

 

The Company operates manufacturing and distribution activities in several jurisdictions, including the United States and South Africa. Although South Africa has announced its intention to implement a Qualified Domestic Minimum Top-Up Tax (QDMTT) beginning in 2024 under Pillar Two, the Group’s consolidated revenue for the past two fiscal years has not exceeded the €750 million threshold. As such, the Group is not currently within the scope of the Pillar Two global minimum tax rules.

  

The Company continues to monitor developments related to Pillar Two in the jurisdictions in which it operates, including the United States and South Africa. If future changes to revenue thresholds or group composition bring the Company into scope, the potential tax impacts will be assessed in accordance with ASC 740, Income Taxes.

 

Based on the current scope criteria and the absence of substantively enacted legislation in the United States, no amounts have been recognized in the consolidated financial statements related to Pillar Two. Any future obligations arising from the implementation of these rules, should the Group become subject to them, will be accounted for as current-period tax expenses, consistent with the FASB staff guidance issued in 2023.