v3.26.1
INCOME TAXES
 12 Months Ended
Mar. 31, 2026
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 14 – INCOME TAXES

 

The components of the provision for income taxes for the years ended March 31, 2026, and 2025 are as follows:

 

Components of Provision for Income Taxes  2026   2025 
Current          
Federal  $246,867   $85,581 
State   13,753    31,195 
Total Current Provision   260,620    116,776 
Deferred          
Federal   1,297,697    (458,686)
State   (25,185    (120,132)
Total Deferred Provision (Benefit)   1,272,512    (578,818)
Change in Valuation allowance   (2,044,808)   578,818 
Total provision for Income Taxes  $-511,676   $116,776 

 

The components of deferred tax assets and liabilities on March 31, 2026, and 2025, are approximately as follows:

 

       
   Year ending March, 31 
   2026   2025 
Deferred Tax assets:          
Net Operating loss carry forwards  $804,528   $1,446,256 
Goodwill  $0   $523,069 
Depreciation  $(133,229)  $33,700 
Other  $100,995   $66,966 
Valuation allowance  $0   $(2,069,991)
Net deferred tax asset  $772,294   $0 

 

 

A reconciliation of the U.S. statutory federal income tax rate to the Company’s effective tax rate for the years ended March 31, 2026, and 2025 are as follows:

 

   2026   2025 
Federal statutory income tax rate   21.0

%

   21.0

%

State taxes, net of federal benefit   4.32

%

   4.35

%

Change in Valuation Allowance   (52.89

)%

   (17.17)%
Net effective tax rate   (27.57)%   8.18

%

 

ASC 740 contains a two-step approach to recognizing and measuring uncertain tax positions. This first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely to be realized upon ultimate settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately anticipate actual outcomes.

 

The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of March 31, 2026, the Company has not recorded any unrecognized tax benefits.

 

The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as interest expense and operating expenses, respectively. As of April 1, 2024, the Company had $0 unrecognized tax benefits and $0 charges during fiscal 2026, and accordingly, the Company did not recognize any interest or penalties during fiscal 2026 related to unrecognized tax benefits. There were no material accruals for uncertain tax positions as of March 31, 2026.

 

As of March 31, 2026, the Company had a net operating loss carry forward (“NOL”) for federal and state income tax purposes of approximately $3,800,000. A majority of this amount is from pre-2018. NOLs generated pre-2018 can be carried forward for 20 years and post-2018 NOLs do not expire but are limited to offset up to 80% of taxable income in any future period.

 

Internal Revenue Code Section 382 (“Section 382”) imposes limitations on the availability of a company’s net operating losses after certain ownership changes occur. Section 382 limitation is based upon certain conclusions pertaining to the dates of ownership changes and the value of the Company on the dates of the ownership changes. It was determined that an ownership change occurred in October 2013, and March 2014. The amount of the Company’s net operating losses incurred prior to the ownership changes is limited based on the value of the Company on the date of the ownership change. Management has not determined the amount of net operating losses generated prior to the ownership change available to offset taxable income after the ownership change.