Income Taxes

12 Months Ended

Mar. 31, 2016

Income Tax Disclosure [Abstract]

Income Taxes

We account for income taxes under ASC 740, which requires the use of the liability method. ASC 740 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.

Income tax provision (benefit) for income taxes is summarized below:

Years Ended	March 31, 2016	March 31, 2015
Current:
Federal	$      ––	$      ––
State	––	––
Total current	––	––
Deferred:
Federal	(291,000)	(461,000)
State	(30,000)	(48,000)
Total deferred	(321,000)	(509,000)
Valuation allowance	321,000	509,000
Total	$            ––	$            ––

The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes consists of the following:

Years Ended	March 31, 2016	March 31, 2015
Federal statutory rate	$(299,000)	$(470,000)
Effect of:
State taxes, net of federal tax benefit	(31,000)	(48,000)
Other	15,000	12,000
Valuation allowance	315,000	506,000
Total	$         ––	$         ––

The components of the deferred tax asset are as follows:

Years Ended	March 31, 2016	March 31, 2015
Credits and net operating loss   carryforwards	$4,190,000	$3,936,000
Other	225,000	158,000
Gross deferred tax assets	4,415,000	4,094,000
Valuation allowance	(4,415,000)	(4,094,000)
Total deferred tax assets	$           ––	$           ––

We believe that based on all available evidence, it is more likely than not that the deferred tax assets will not be fully realized. Accordingly, a valuation allowance has been recorded against the deferred tax asset.

As of March 31, 2016, we had approximately $11.1 million of net operating loss carryovers for tax purposes. Additionally, we have approximately $233,000 of research and development tax credits available to offset future federal income taxes. The net operating loss and credit carryovers begin to expire in the fiscal year ended March 31, 2019. In fiscal years ended after March 31, 2019, net operating losses expire at various dates through March 31, 2036. Our net operating loss carryovers at March 31, 2016 include $582,000 in income tax deductions related to stock options which will be tax effected and the benefit will be reflected as a credit to additional paid-in capital when realized. As such, these deductions are not reflected in our deferred tax assets. The Internal Revenue Code contains provisions, which may limit the net operating loss carryforwards available to be used in any given year if certain events occur, including significant changes in ownership interests.