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:

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

The change in the Company’s valuation allowance is as follows:

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:

The reconciliation of the U.S federal income tax provision for the year ended March 31, 2026 above reflects the adoption of ASU 2023-09 in the fourth quarter of the fiscal year ended March 31, 2026, on a prospective basis. See Note 2, Summary of Significant Accounting Policies – Recent Accounting Standards Adopted, for additional information on the adoption of ASU 2023-09.

The reconciliation of the U.S. federal income tax provision at the statutory federal income tax rate of 21.0% for the year ended March 31, 2025 to our provision for income taxes, as previously disclosed, prior to the adoption of ASU 2023-09, was as follows:

For the year ended March 31, 2026, the Company’s effective tax rate was 3.2%, which consisted principally of a federal rate of 21%, the Company’s estimate of state taxes, net of federal benefit, of -%, research and development tax credit of 2.1%, a true-up of the tax provision of 2.1%, offset by an increase in the valuation allowance for the Company’s deferred tax assets of 22.6% at March 31, 2026.

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.

Income taxes paid, net of (refunds), are as follows:

During the fiscal year ended March 31, 2026, income taxes paid, net of refunds was a net refund of $388,176. The refund of federal income taxes was principally attributable to the receipt of a refund in the amount of $418,000 related to the fiscal year ended March 31, 2024. State and local payments were principally attributable to payments to the state of Massachusetts.

As of March 31, 2026, for U.S. federal and state income tax reporting purposes, the Company has approximately $9,718,000 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, 2026, 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.

In July 2025, U.S tax legislation known as the “One Big Beautiful Act”, or OBBBA, was signed into law which makes permanent many of the tax provisions enacted in 2017 as part of the TCJA that were set to expire at the end of 2025. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions, including depreciation and timing for the deductibility of research and development expenses. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The OBBBA did not have a material effect on the Company’s financial statements for the year ended March 31, 2026.

The Company remains subject to examination by tax authorities for fiscal tax years ended March 31, 2022 and later.

Based upon the Company’s recent taxable loss history, the Company performed an analysis and determined that a deferred tax asset valuation allowance of $2,666,961 and $2,319,591 was required for the fiscal years ended March 31, 2026 and 2025, respectively.

The Company has previously recorded liabilities for underpayment of income taxes and related interest and penalties for uncertain tax positions based on the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. At March 31, 2026 the amount included in corporate income taxes receivable is a liability of 177,618, inclusive of penalties and interest totaling $72,644. This amount is unchanged from March 31, 2025. 

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits, excluding interest and penalties, for the fiscal years ended March 31, 2026 and 2025: