10.	INCOME TAXES

We utilize our estimated annual effective tax rate to determine our provision (benefit) for income taxes for interim periods. The income tax provision (benefit) is computed by multiplying the estimated annual effective tax rate by the year to date pre-tax book income (loss).

We recorded income tax expense of

$11,000

and

$26,000

for the

three

months ended

September

31,

2017

and

2016,

respectively. We recorded income tax expense of

$21,000

and income tax benefit of (

$24,000

) for the

six

months ended

September 30, 2017

and

2016,

respectively. Our effective tax rate was

2.2%

and

2.1%

for the

three

and

six

months ended

September

30,

2017,

respectively, and

21.0%

and (

3.9%

) for the

three

and

six

months ended

September

30,

2016,

respectively. The effective tax rate for the

three

and

six

months ended

September 30, 2017

differs from the statutory rate of

34%

as a result of state taxes (net of federal benefit) and the net change in valuation allowance against the net deferred tax asset the Company believes is

not

more likely than

not

to be realized.

The Company is subject to taxation in the United States and

two

state jurisdictions. The preparation of tax returns requires management to interpret the applicable tax laws and regulations in effect in such jurisdictions, which could affect the amount of tax paid by the Company. Management, in consultation with its tax advisors, files its tax returns based on interpretations that are believed to be reasonable under the circumstances. The income tax returns, however, are subject to routine reviews by the various taxing authorities. As part of these reviews, a taxing authority

may

disagree with respect to the tax positions taken by management (“uncertain tax positions”) and therefore

may

require the Company to pay additional taxes. Management evaluates the requirement for additional tax accruals, including interest and penalties, which the Company could incur as a result of the ultimate resolution of its uncertain tax positions. Management reviews and updates the accrual for uncertain tax positions as more definitive information becomes available from taxing authorities, completion of tax audits, expiration of statute of limitations, or upon occurrence of other events.

As of

September

30,

2017,

there was

liability for income tax associated with unrecognized tax benefits. The Company recognizes accrued interest related to unrecognized tax benefits as well as any related penalties in interest income or expense in its consolidated condensed statements of operations, which is consistent with the recognition of these items in prior reporting periods.

With few exceptions, the Company is

longer subject to U.S. federal, state, local, and non-U.S. income tax examination by tax authorities for tax years before

201