v3.25.1
Income Taxes
 12 Months Ended
Mar. 31, 2025
Income Taxes [Abstract]  
INCOME TAXES
Note 7 INCOME TAXES:

 

The Company accounts for income taxes under the provisions of ASC Topic 740 (“ASC 740”), “Income Taxes”. Under ASC 740, deferred income tax assets or liabilities are computed based upon the temporary differences between the financial statement and income tax bases of assets and liabilities using the currently enacted marginal income tax rates. Deferred income tax expense or credits are based on the changes in the deferred income tax assets or liabilities from period to period.

 

The provision (benefit) for income taxes consists of the following:

 

    For the Fiscal Years Ended
March 31,		  
    2025     2024  
             
Current:            
Federal   $ 64,300     $ 812,714  
State and local     (63,185 )     (1,530,005 )
Total current tax provision (benefit)     1,115       (717,291 )
                 
Deferred:                
Federal     -       -  
State and local     -       -  
Total deferred tax expense     -       -  
                 
Total provision (benefit)   $ 1,115     $ (717,291 )

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets are as follows:

 

   As of March 31, 
   2025   2024 
Deferred tax assets:        
Net operating loss  $1,416,684   $1,727,759 
Operating right-of-use liability   519,058    592,908 
Stock options   903,449    837,520 
Accrued expenses   
-
    48,376 
Capitalized research and development costs   241,761    137,860 
Inventory   187,534    263,969 
Total deferred tax assets   3,268,486    3,608,392 
Valuation allowance   (2,319,591)   (2,537,690)
Deferred tax assets, net of valuation allowance   948,895    1,070,702 
           
Deferred tax liabilities:          
Depreciation   492,376    538,334 
Operating lease right-of-use assets   456,519    532,368 
Total deferred tax liabilities   948,895    1,070,702 
           
Deferred tax assets (liability), net  $
-
   $
-
 

A reconciliation of the provision for income taxes with the amounts computed by applying the statutory Federal income tax rate to income before provision for income taxes is as follows:

 

   For the Fiscal Years Ended
March 31,		 
   2025   2024 
         
U.S. federal statutory rate   21.0%   21.0%
State taxes, net of federal benefit   2.2%   1.9%
Stock-based compensation   (0.1)%   (2.2)%
Other   3.0%   
-
%
True-up of tax provision   (4.2)%   12.4%
Valuation allowance   (21.8)%   (13.4)%
Effective tax rate   0.1%   19.7%

 

For the year ended March 31, 2025, the Company’s effective tax rate was 0.1%, which consisted principally of a federal rate of 21%, the Company’s estimate of state taxes, net of federal benefit, of 2.2%, offset by a credit of (4.2%) for true-ups and a decrease (21.8%) in the valuation allowance for the Company’s deferred tax assets at March 31, 2025.

 

For the year ended March 31, 2024, the Company’s effective tax rate was 19.7%, which consisted principally of a federal rate of 21%, the Company’s estimate of state taxes, net of federal benefit, of 1.9%, and true-up to prior years returns of 12.4%, offset by a charge of (13.4%) for an increase in the valuation allowance for the Company’s deferred tax assets at March 31, 2024.

 

As of March 31, 2025, for U.S. federal and state income tax reporting purposes, the Company has approximately $6,247,000 of unused net operating losses (“NOLs”) available for carry forward to future years. As a result of the Tax Cuts and Jobs Act of 2017 (“TCJA”), for U.S. income tax purposes, NOLs generated in tax years beginning after December 31, 2017 may be carried forward indefinitely to offset future taxable income. The total amount of the Federal NOL as of March 31, 2025, may be carried forward indefinitely. The state and city NOLs may generally be carried forward for twenty years and may be applied against future taxable income. Further, the benefit from utilization of NOL carry forwards could be subject to limitations due to material ownership changes that could occur if the Company issues additional shares of common stock.

 

The Company remains subject to examination by tax authorities for fiscal tax years ended March 31, 2021 and later.

 

Based upon the Company’s recent taxable loss history, the Company performed an analysis and determined that it was necessary to establish a valuation reserve with respect to its net deferred income tax assets as of and for the fiscal year ended March 31, 2025.

 

As of March 31, 2025, management does not believe that the Company has any material uncertain tax positions that would require it to measure and reflect the potential lack of sustainability of a position on audit in its financial statements. The Company will continue to evaluate its uncertain tax positions in future periods to determine if measurement and recognition in its financial statements is necessary. The Company does not believe there will be any material changes in its unrecognized tax positions over the next year.