Income Taxes

9 Months Ended

Dec. 31, 2018

Income Taxes

We calculate our interim tax provision in accordance with the guidance for accounting for income taxes in interim periods. We estimate the annual effective tax rate and apply that tax rate to our ordinary quarterly pre-tax income. The tax expense or benefit related to discrete events during the interim period is recognized in the interim period in which those events occurred.

The Company recognizes a liability or asset for the deferred tax consequences of temporary differences between the tax basis of assets or liabilities and their reported amounts in the financial statements. These temporary differences may result in taxable or deductible amounts in future years when the reported amounts of the assets or liabilities are recovered or settled. The deferred tax assets are reviewed periodically for recoverability and a valuation allowance is provided whenever it is more likely than not that a deferred tax asset will not be realized. The Company has previously established a full valuation allowance on its deferred tax assets to recognize that net operating losses, and research and foreign tax credits expiring in future periods will likely not be realized. This determination was made based on continued taxable losses which cause uncertainty as to whether the Company will generate sufficient taxable income to use the deferred tax assets prior to expiration. Our ability to realize the tax benefits associated with the deferred tax assets depends primarily upon the timing of future taxable income and the expiration dates of the components of the deferred tax assets. If sufficient future taxable income is generated, we may be able to offset a portion of future tax expenses.

The

Tax Cut and Jobs Act

includes a “Deemed Repatriation Transition Tax” (“Transition Tax”) and is a tax on previously untaxed accumulated and current earnings and profits (“E&P”) of our Hong Kong Joint Venture. The Company has completed its tax returns for the fiscal year ending March 31, 2018

and determined that it will not have a net tax liability since it has sufficient net operating loss carryforwards and foreign tax credit carryforwards to offset the unremitted earnings and profits of its Hong Kong Joint Venture that are subject to the Transition tax. The Company has remaining net operating loss and foreign tax credits carryforwards that remain fully reserved. Our ability to realize the remaining tax benefits associated with these net operating loss and foreign tax credits carryforwards depends primarily upon the timing of future taxable income and the expiration dates of the components of these carryforwards. If sufficient future taxable income is generated, we may be able to offset a portion of future tax expenses.