5. INCOME TAXES	6 Months Ended
Sep. 30, 2016
INCOME TAXES
NOTE 5-INCOME TAXES	NOTE 5—INCOME TAXES The current portion of the Company’s unrecognized tax benefits was $0 at both September 30, 2016 and March 31, 2016. The long-term portion at September 30, 2016 and March 31, 2016 was $254,000 and $116,000, respectively, of which the timing of the resolution is uncertain. As of September 30, 2016, $2,078,000 of unrecognized tax benefits had been recorded as a reduction to net deferred tax assets. As of September 30, 2016 and March 31, 2016, the Company’s net deferred tax assets of $8.0 million and $6.4 million, respectively, were subject to a full valuation allowance. The Company recorded a net deferred tax liability of $821,000 associated with the estimated fair value adjustments of the intangible assets acquired in its acquisition of MikaMonu in the quarter ended December 31, 2015. During the six months ended September 30, 2016, the Company reversed the deferred tax liability and recorded a prepaid asset of $636,000 associated with the transfer of the acquired intangible assets out of Israel. During the three months ended June 30, 2016, the Company recorded a tax benefit of $71,000 that is included in the tax provision for the quarter then ended, to the reduction of uncertain tax benefits as a result of the lapse of applicable statutes of limitations. Management believes that it is reasonably possible that within the next twelve months the Company could have a reduction in uncertain tax benefits of up to $438,000, including interest and penalties, related to positions taken with respect to credits and loss carryforwards on previously filed tax returns. The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the provision for income taxes in the Condensed Consolidated Statements of Operations. The Company is subject to taxation in the United States and various state and foreign jurisdictions. Fiscal years 2013 through 2016 remain open to examination by federal tax authorities, and fiscal years 2012 through 2016 remain open to examination by California tax authorities. The Company’s estimated annual effective income tax rate was approximately 23.5% and 3.5% as of September 30, 2016 and 2015, respectively. The annual effective tax rates as of September 30, 2016 and 2015 vary from the United States statutory income tax rate primarily due to valuation allowances in the United States, whereby pre-tax losses do not result in the recognition of corresponding income tax benefits and expenses, and the foreign tax differential.

NOTE 5—INCOME TAXES

The current portion of the Company’s unrecognized tax benefits was $0 at both September 30, 2016 and March 31, 2016. The long-term portion at September 30, 2016 and March 31, 2016 was $254,000 and $116,000, respectively, of which the timing of the resolution is uncertain. As of September 30, 2016, $2,078,000 of unrecognized tax benefits had been recorded as a reduction to net deferred tax assets. As of September 30, 2016 and March 31, 2016, the Company’s net deferred tax assets of $8.0 million and $6.4 million, respectively, were subject to a full valuation allowance.

The Company recorded a net deferred tax liability of $821,000 associated with the estimated fair value adjustments of the intangible assets acquired in its acquisition of MikaMonu in the quarter ended December 31, 2015. During the six months ended September 30, 2016, the Company reversed the deferred tax liability and recorded a prepaid asset of $636,000 associated with the transfer of the acquired intangible assets out of Israel.

During the three months ended June 30, 2016, the Company recorded a tax benefit of $71,000 that is included in the tax provision for the quarter then ended, to the reduction of uncertain tax benefits as a result of the lapse of applicable statutes of limitations.

Management believes that it is reasonably possible that within the next twelve months the Company could have a reduction in uncertain tax benefits of up to $438,000, including interest and penalties, related to positions taken with respect to credits and loss carryforwards on previously filed tax returns.

The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the provision for income taxes in the Condensed Consolidated Statements of Operations.

The Company is subject to taxation in the United States and various state and foreign jurisdictions. Fiscal years 2013 through 2016 remain open to examination by federal tax authorities, and fiscal years 2012 through 2016 remain open to examination by California tax authorities.

The Company’s estimated annual effective income tax rate was approximately 23.5% and 3.5% as of September 30, 2016 and 2015, respectively. The annual effective tax rates as of September 30, 2016 and 2015 vary from the United States statutory income tax rate primarily due to valuation allowances in the United States, whereby pre-tax losses do not result in the recognition of corresponding income tax benefits and expenses, and the foreign tax differential.