Income Taxes

12 Months Ended

Mar. 31, 2024

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

15. Income Taxes

Income tax provision (benefit):

	Fiscal Year Ended
	March 31,		March 31,
	2024		2023
Current:
Federal	$	-	$	-
State and local		665		211
Total current tax provision		665		211
Deferred:
Federal		146,595		(120,422	)
State and local		30,683		(7,926	)
Total deferred tax provision (benefit)		177,278		(128,348	)
Total provision (benefit)	$	177,943	$	(128,137	)

The approximate values of the components of the Company’s deferred taxes on March 31, 2024, and 2023 are as follows:

	March 31,			March 31,
	2024			2023
Deferred tax assets (liabilities):
Net operating loss carryforwards	$	1,234,075		$	566,694
Tax credits		342,218			329,032
Charitable contributions		53			54
Legal damages		-			1,363,176
Allowance for credit losses		1,817			1,372
Reserve for inventory obsolescence		81,609			98,608
Vacation accrual		35,396			35,025
Warranty reserve		18,565			18,732
Deferred revenues		25,388			63,651
Stock options		-			16,001
Gain on Sale of Asset		350			354
Depreciation		13,052			5,986
174 Capitalization		835,914			229,250
Deferred tax asset		2,588,437			2,727,935
Less valuation allowance		(137,780	)		(100,000	)
Deferred tax asset, net	$	2,450,657		$	2,627,935

The recognized deferred tax assets are based upon the expected utilization of their benefit from future taxable income. The Company has federal net operating loss (“NOL”) carryforwards of $5,836,933 as of March 31, 2024. These loss carryforwards are available to offset future taxable income and a certain amount are subject to expiration, beginning in the year 2033. The current year federal NOL of approximately $3,173,465 does not expire. New Jersey state NOL carryforwards $31,777 as of March 31, 2024. New Jersey state NOL carryforwards expire in 20 years, and certain of these amounts begin to expire in 2038. Kansas state NOL carryforwards $135,175 as of March 31, 2024. Kansas state NOL carryforwards do not expire.

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. For the year ended March 31, 2024, the Company reported a tax provision of $177,943 as compared to a $(128,137) tax benefit in the prior year. The ERC interest included in year ended March 31, 2023 was a taxable event and the ERC refunds included in year ended March 31, 2023 were non-taxable events.

The differences between income taxes expected at the U.S. federal statutory income tax rate of 21 percent and the reported income tax expense are due to the recognition of the non-taxable ERC of $628,400 as other income during fiscal year ended March 31, 2023. A reconciliation of the income tax expense (benefit) provision at the statutory Federal tax rate of 21% for the years ended March 31, 2024, and 2023, respectively, to the income tax benefit provision recognized in the financial statements is as follows:

	March 31,			March 31,
	2024			2023
Income tax provision – statutory rate	$	109,165		$	(108,503	)
Income tax expenses – state and local, net of federal benefit		(170	)		(3,966	)
Permanent items		2,335			(126,355	)
Valuation Allowance		37,780			-
Rate changes		19,103			(21,942	)
True ups		9,730			132,629
Income tax provision (benefit)	$	177,943		$	(128,137	)