NOTE 12 - INCOME TAX

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has evaluated Staff Accounting Bulletin No. 118 regarding the impact of the decreased tax rates of the Tax Cuts & Jobs Act. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company and its subsidiaries file income tax returns in the U.S. and foreign jurisdictions. The U.S. federal and foreign jurisdiction income tax rates of 21% and 22%, respectively, are being used.

For financial reporting purposes, loss before provision for income taxes, includes the following components:

SCHEDULE OF LOSS BEFORE PROVISION FOR INCOME TAXES 

The table below provides the updated requirements of ASU 2023-09 for 2025. See Notes to Consolidated Financial Statements - Income Taxes for additional details on the adoption of ASU 2023-09. The effective tax rate differs from the federal statutory income tax rate applied to the loss before provision for income taxes and tax due to the following:

 SCHEDULE OF RECONCILIATION OF TAXES ON INCOME

As previously disclosed for the year ended March 31, 2025, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:

 SCHEDULE OF RECONCILIATION ON EFFECTIVE TAX RATE

The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and deferred tax liabilities consist of the following:

 SCHEDULE OF COMPONENTS OF DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES

At March 31, 2026 and 2025, the Company had net operating loss carry forwards of approximately $25,190,000 and $24,941,000, respectively, that may be offset against future taxable income. During the years ended March 31, 2026 and 2025, the total change in the valuation allowance was $223,626 and $490,656, respectively. Net operating loss carryforwards of approximately $20,762,400 can be carried forward for 20 years and begin to expire in 2024. Net operating loss carryforward amounts of $10,732,500 can be carried forward indefinitely, but are limited to 80% of taxable income in any one year. The Company has net operating loss carryforwards that have resulted in deferred tax assets of approximately $5,302,399, of which $930,000 have no expiration date. The Company maintains certain earnings as indefinitely reinvested in operations outside of the United States, for which no deferred income taxes have been provided. Determination of the amount of unrecognized deferred tax liability, if any, associated with such earnings is not practicable. No tax benefit has been reported in the March 31, 2026, financial statements since the potential tax benefit is offset by a valuation allowance of the same amount. A portion of the Company’s deferred tax liability, totaling $735,953, relates to the income tax effect of foreign currency translation adjustments on its foreign subsidiaries, which was recorded through other comprehensive income

The Company’s ability to use its net operating loss carryforwards may be substantially limited due to ownership change limitations that may occur as required by Section 382 of the Internal Revenue Code of 1986 as amended. The Company has not completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since incurring losses. If the Company has completed an ownership change, utilization of the net operating loss carryforwards would be subject to annual limitations under Section 382. Any limitation could result in expiration of a portion of the net operating loss carryforwards before utilization. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2016.