7. Income Taxes

12 Months Ended

Mar. 31, 2016

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

7.                   Income Taxes

Income tax (benefit) provision:

	Fiscal Year Ended
	March 31,		March 31,
	2016		2015
Current:
Federal	$	52,123	$	-
State and local		1,500		-
Total current tax provision		53,623		-
Deferred:
Federal		796,500		(171,180	)
State and local		1,845		91,808
Total deferred tax provision  (benefit)		798,345		(79,372	)
Total provision (benefit)	$	851,968	$	(79,372	)

The approximate values of the components of the Company’s deferred taxes at March 31, 2016 and 2015 are as follows:

	March 31,			March 31,
	2016			2015
Deferred tax assets:
Net operating loss carryforwards	$	1,802,492		$	2,865,606
Tax credits		329,032			329,032
Charitable contributions		51			17
Allowance for doubtful accounts		2,550			8,499
Reserve for inventory obsolescence		98,614			78,024
Inventory capitalization		69,918			76,820
Deferred payroll		88,288			29,264
Vacation accrual		134,116			111,880
Warranty reserve		70,765			47,754
Deferred revenues		75,310			51,812
Stock options		23,544			23,561
Non-compete agreement		7,889			9,868
AMT credit		52,123
Depreciation		26,721			(52,379	)
Deferred tax asset		2,781,413			3,579,758
Less valuation allowance		(137,780	)		(137,780	)
Deferred tax asset, net	$	2,643,633		$	3,441,978
Deferred tax asset – current	$	578,507		$	1,064,395
Deferred tax asset – long-term		2,065,126			2,377,583
Total	$	2,643,633		$	3,441,978

The recognized deferred tax asset is based upon the expected utilization of its benefit from future taxable income. The Company has federal net operating loss (“NOL”) carryforwards of approximately $5,301,000 as of March 31, 2016. These carryforward losses are available to offset future taxable income, and begin to expire in the year 2027. New Jersey State NOL carryforwards approximate $3,989,000 as of March 31, 2016. New Jersey State NOL carryforwards expire in 20 years, and certain of these amounts begin to expire in 2030.

The foregoing amounts are management’s estimates, and the actual results could differ from those estimates. Future profitability in this competitive industry depends on continually obtaining and fulfilling new profitable sales agreements and modifying products.  The inability to obtain new profitable contracts or the failure of the Company’s engineering development efforts could reduce estimates of future profitability, which could affect the Company’s ability to realize the deferred tax assets.

A reconciliation of the income tax (benefit) provision at the statutory Federal tax rate of 34% to the income tax (benefit) provision recognized in the financial statements is as follows:

	March 31,			March 31,
	2016			2015
Income tax (benefit) provision  – statutory rate	$	631,081		$	(122,338	)
Income tax expenses – state and local, net of federal benefit		2,835			(104	)
Permanent items		12,194			10,802
Change in value of warrants – permanent difference		209,862			55,982
True-up of prior year’s deferred taxes		(4,281	)		(162,527	)
Change in valuation allowance		-			137,780
Other		277			1,033
Income tax provision (benefit)	$	851,968		$	(79,372	)