Income Taxes

12 Months Ended

Mar. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

5.       Income Taxes

We account for income taxes under ASC 740, which requires the use of the liability method. ASC 740 provides that deferred income 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 income 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 income 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, 2021			March 31, 2020
Current:
Federal	$	––		$	––
State		––			––
Total current		—			—
Deferred:
Federal		228,000			442,000
State		44,000			71,000
Total deferred		272,000			513,000
Valuation allowance		(272,000	)		(513,000	)
Total	$	—		$	—

The following is a reconciliation between the effective rate and the federal statutory rate:

Years Ended	March 31, 2021			March 31, 2020
Expected income tax rate	$	123,000		$	(42,000	)
State income taxes, net of federal tax benefit		23,000			(9,000	)
PPP forgiveness		(150,000	)
Other permanent differences		1,000			10,000
Research credits		(40,000	)		(35,000	)
Change in valuation allowance		43,000			76,000
Income tax expense	$	—		$	—

The components of the net accumulated deferred income tax asset (liability) are as follows:

Years Ended	March 31, 2021			March 31, 2020
Other deferred assets	$	148,000		$	71,000
Valuation allowance		(148,000	)		(71,000	)
Current deferred tax assets		—			—
Credits and net operating loss   carryforwards		2,151,000			2,222,000
Valuation allowance		(2,151,000	)		(2,222,000	)
Long-term deferred tax assets		—			—
Total deferred tax assets		—			—
Valuation allowance		—			—
Long-term deferred tax liabilities		—			—
Total deferred tax liabilities		—			—
Net deferred tax assets (liabilities)	$	—		$	—

The primary components of our deferred tax assets are described below:

Years Ended	March 31, 2021			March 31, 2020
Differences in reporting long-term assets	$	148,000		$	71,000
Credits and net operating loss   carryforwards		2,151,000			2,222,000
Less valuation allowance		(2,299,000	)		(2,293,000	)
Total deferred tax assets	$	—		$	—

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which net operating losses and reversal of timing differences may offset taxable income. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. Due to our lack of earnings history, the net deferred tax assets have been fully offset by a valuation allowance.

As of March 31, 2021, we had approximately $7.1 million of net operating loss carryovers for tax purposes. Additionally, we have approximately $367,000 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, 2022. In fiscal years ended after March 31, 2022, net operating losses expire at various dates through March 31, 2041. Our net operating loss carryovers at March 31, 2021 include $455,000 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.