3. Taxes

3 Months Ended

Jun. 30, 2012

Income Tax Disclosure [Text Block]

3.           Taxes

As part of the process of preparing the unaudited condensed consolidated financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates.  This process involves estimating the current tax liability under the most recent tax laws and assessing temporary differences resulting from differing treatment of items for tax and accounting purposes.  These differences result in deferred tax assets and liabilities, which are included in the unaudited condensed consolidated balance sheet.

Income tax benefit for the two months ended May 31, 2012 was $34,000, or 13% of pre-tax income as compared to a benefit of $0.3 million, or 34% of pre-tax income for the quarter ended June 30, 2011.  The effective tax rate for the two months ended May 31, 2012 differs from the U.S. federal statutory rate of 34% primarily due to the unfavorable impact of current federal and state income taxes.

As of June 30, 2012, the Company’s total gross unrecognized tax benefit did not materially change compared with the balance as of March 31, 2012.  The Company has provided a liability of approximately $3.5 million representing unrecognized tax benefits relating to federal and state R&D credit.  All of this amount would impact the Company’s effective rate, if recognized.  Penalty and interest of approximately $0.4 million has been accrued in income tax expense.