Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

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Income Taxes
6 Months Ended
Sep. 30, 2018
Income Taxes [Abstract]  
Income Taxes

NOTE 8 - Income Taxes

 

Income tax expense for the three-month and six-month periods ended September 30, 2018 and 2017 consisted of the following:

 

      Three Months Ended
September 30,
    Six Months Ended
September 30,
 
      2018     2017     2018     2017  
  Current:                        
  Federal   $ -     $ -     $ -     $ -  
  State     -       -       -       -  
  Foreign     -       4,453       -       7,504  
  Total   $ -     $ 4,453     $ -     $ 7,504  

 

The following table presents a reconciliation of the income tax at statutory tax rate and the Company’s income tax at effective tax rate for the three-month and six-month periods ended September 30, 2018 and 2017.

 

      Three Months Ended
September 30,
    Six Months Ended
September 30,
 
      2018     2017     2018     2017  
  Tax benefit at statutory rate   $ (524,572 )   $ (472,974 )   $ (971,900 )   $ (1,331,054 )
  Net operating loss carryforwards (NOLs)     574,199       385,320       1,115,100       978,900  
  Stock-based compensation expense     84,574       116,900       165,100       386,500  
  Amortization expense     (62,700 )     4,500       (64,400 )     33,500  
  Accrued R&D expense     -       -       (168,000 )     -  
  Others     (71,501 )     (29,293 )     (75,900 )     (60,342 )
  Tax at effective tax rate   $ -     $ 4,453     $ -     $ 7,504  

  

Deferred tax assets (liability) as of September 30, 2018 and March 31, 2018 consist of:

 

      September 30,
2018
    March 31,
2018
 
               
  Net operating loss carryforwards (NOLs)   $ 5,378,000     $ 2,339,000  
  Stock-based compensation expense     793,000       566,000  
  Accrued expenses and unpaid payable     149,000       268,000  
  Tax credit carryforwards     68,000       68,000  
  Excess of tax amortization over book amortization     (787,000 )     (635,000 )
  Others     13,000       235,000  
        5,614,000       2,841,000  
  Valuation allowance     (5,614,000 )     (2,841,000 )
  Net   $ -     $ -  

 

Management does not believe the deferred tax assets will be utilized in the near future; therefore, a full valuation allowance is provided. The net change in deferred tax assets valuation allowance was an increase of $2,773,000 for the six months ended September 30, 2018.

 

As of September 30, 2018 and March 31, 2018, the Company had federal NOLs of approximately $18,265,000 and $7,643,000, respectively, available to reduce future federal taxable income, expiring in 2038 and 2037. As of September 30, 2018 and March 31, 2018, the Company had State NOLs of approximately $20,102,000 and $8,985,000, respectively, available to reduce future state taxable income, expiring in 2038.

 

As of September 30, 2018 and March 31, 2018, the Company has Japan NOLs of approximately $307,000 and $339,000 available to reduce future Japan taxable income, expiring in 2028.

 

As of September 30, 2018 and March 31, 2018, the Company has Taiwan NOLs of approximately $238,000 and $0 available to reduce future Taiwan taxable income, expiring in 2028. As of September 30, 2018 and March 31, 2018, the Company had approximately $37,000 and $37,000 of federal research and development tax credit, available to offset future federal income tax. The credit begins to expire in 2034 if not utilized. As of September 30, 2018 and March 31, 2018, the Company had approximately $39,000 and $39,000 of California state research and development tax credit available to offset future California state income tax. The credit can be carried forward indefinitely.

 

The Company’s ability to utilize its federal and state NOLs to offset future income taxes is subject to restrictions resulting from its prior change in ownership as defined by Internal Revenue Code Section 382. The Company does not expect to incur the limitation on NOLs utilization in future annual usage.