11.	INCOME TAXES

December 22, 2017

H.R.

originally known as the Tax Cuts and Jobs Act, (the “Tax Act”) was enacted. Among the significant changes to the U.S. Internal Revenue Code, the Tax Act lowers the U.S. federal corporate income tax rate (“Federal Tax Rate”) from

34%

21%

effective

January 1, 2018.

The

21%

Federal Tax Rate applies to fiscal years ending

March 31, 2019

and each year thereafter.

The Company utilizes its estimated annual effective tax rate to determine its provision or benefit for income taxes for interim periods. The income tax provision or benefit is computed by multiplying the estimated annual effective tax rate by the year to date pre-tax book income (loss). The Company recorded an income tax expense of

$32,000

and

$73,000

for the

three

months ended

December 31, 2019

and

2018,

respectively. The Company recorded an income tax expense of

$29,000

and

$33,000

for the

nine

months ended

December 31, 2019

and

2018,

respectively. The Company’s effective tax rate was

15.8%

and

20.2%

for the

three

months ended

December 31, 2019

and

2018,

respectively. The Company’s effective tax rate was

9.7%

and (

1.6%

) for the

nine

months ended

December 31, 2019

and

2018,

respectively. The effective tax rates for the

three

and

nine

months ended

December 31, 2019

and

2018

differ from the statutory rate of

21%

as a result of state taxes (net of federal benefit) and the net change in valuation allowance against the net deferred tax asset the Company believes is

not

more likely than

not

to be realized. The Company continues to carry a full valuation allowance on its net deferred tax assets.

The Company is subject to taxation in the United States and

six

state jurisdictions. The preparation of tax returns requires management to interpret the applicable tax laws and regulations in effect in such jurisdictions, which could affect the amount of tax paid by the Company. Management, in consultation with its tax advisors, files its tax returns based on interpretations that are believed to be reasonable under the circumstances. The income tax returns, however, are subject to routine reviews by the various taxing authorities. As part of these reviews, a taxing authority

may

disagree with respect to the tax positions taken by management (“uncertain tax positions”) and therefore

may

require the Company to pay additional taxes. Management evaluates the requirement for additional tax accruals, including interest and penalties, which the Company could incur as a result of the ultimate resolution of its uncertain tax positions. Management reviews and updates the accrual for uncertain tax positions as more definitive information becomes available from taxing authorities, completion of tax audits, expiration of statute of limitations, or upon occurrence of other events.

As of

December 31, 2019

and

2018,

there was

liability for income tax associated with unrecognized tax benefits. The Company recognizes accrued interest related to unrecognized tax benefits as well as any related penalties in interest income or expense in its consolidated condensed statements of operations, which is consistent with the recognition of these items in prior reporting periods.

With few exceptions, the Company is

longer subject to U.S. federal, state, local, and non-U.S. income tax examination by tax authorities for tax years before

2014.