Income Taxes

12 Months Ended

Mar. 31, 2017

Notes

Income Taxes

6.Income Taxes

As of March 31, 2017 and 2016, we had no material unrecognized tax benefits and no adjustments to liabilities or operations were required.

Tax years 2013 through 2017 are subject to examination by the federal and state taxing authorities. There are no income tax examinations currently in process.

Reconciliation between our effective tax rate and the United States statutory rate is as follows:

	Year Ended March 31, 2017	Year Ended March 31, 2016
Expected federal tax rate	34.0%	34.0%
State income taxes, net of federal tax benefit	5.5%	5.5%
Non-deductible expenses	(5.2%)	121.2%
Federal R&D tax credits, net	0.0%	0.0%
Utilization of net operating losses	(34.3%)	(160.7%)
Change in valuation allowance	0.0%	0.0%
Effective tax rate	0.0%	0.0%

The following is a summary of the significant components of our deferred tax assets as of March 31, 2017 and 2016:

(in thousands)	March 31, 2017	March 31, 2016
Deferred Tax Assets:
Net operating loss carryforwards	$             9,305	$             9,276
Capital loss carry forward	-	-
Tax credit carry forward	306	306
Inventory and receivable allowances	147	37
Accrued expenses deductible when paid	111	42
Deferred tax assets	9,869	9,661
Deferred Tax Liabilities:
Depreciation and amortization	(191)	(210)
Deferred tax liabilities	(191)	(210)
Net deferred tax assets	9,678	9,451
Valuation allowance	(9,678)	(9,451)
Net deferred tax assets	$                     -	$                     -

Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and the tax basis of the assets and liabilities using the enacted tax rate in effect in the years in which the differences are expected to reverse. A 100% valuation allowance has been recorded against the deferred tax asset as it is more likely than not, based upon our analysis of all available evidence, that the tax benefit of the deferred tax asset will not be realized.

As of March 31, 2017, we have the following unused net operating loss and tax credit carryforwards available to offset future federal and state taxable income, both of which expire at various times as noted below:

(in thousands)	Net Operating Losses	Investment & Research Credits	Expiration Dates
Federal	$    26,672	$            -	2020 to 2037
State	$      6,192	$            -	2032 to 2037

Approximately $1,400,000 of the above Federal net operating loss carryforwards relate to stock compensation. The related tax benefit of approximately $553,000 will be credited to additional paid-in capital upon realization.