INCOME TAXES

3 Months Ended

Jun. 30, 2018

NOTE 12 - INCOME TAXES

We account for income taxes under the provisions of FASB ASC 740,

Income Taxes

. The tax provision for interim periods is determined using the estimated annual effective consolidated tax rate, based on the current estimate of full-year earnings before taxes, adjusted for the impact of discrete quarterly items. The provision for income taxes was $65,029 and $287,635 for the three months ended June 30, 2018 and 2017, respectively.

The Company's earnings are primarily domestic, and its effective tax rates on earnings from operations for the three months ended June 30, 2018 was 28.4%. The lower effective tax rate for the three months ended June 30, 2018, was primarily attributable to a reduction in our federal corporate income tax rate from 34% to 21%, enacted under the Tax

Cuts and Jobs Act, or the Tax

Act of 2017.

On December 22, 2017, Staff Accounting Bulletin No. 118, or SAB 118, was issued to provide guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740,

Income Taxes

. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act are incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements.

During the three months ended June 30, 2018, we did not recognize any changes to the provisional amounts recorded in our March 31, 2018 Annual Report on Form 10-K in connection with the 2017 Tax Act. We expect to finalize our analysis within the measurement period in accordance with SAB 118 after completing our reviews of additional guidance issued by the Internal Revenue Service and tax accounting estimates made at March 31, 2018.

The valuation allowance on deferred tax assets at June 30, 2018 was approximately $1.7 million. We believe that it is more likely than not that the benefit from certain state and foreign NOL carryforwards and other deferred tax assets will not be realized. In recognition of this risk, we continue to provide a valuation allowance on these items. In the event future taxable income is below management’s estimates or is generated in tax jurisdictions different than projected, the Company could be required to increase the valuation allowance for deferred tax assets. This would result in an increase in the Company’s effective tax rate.