|9 Months Ended|
Dec. 31, 2021
|Income Tax Disclosure [Abstract]|
Note 11 – Income Taxes
During the nine months ended December 31, 2021 and the fiscal year ended March 31, 2021, the Company did not record a provision for income taxes due to the recognition of a full valuation allowance.
As of December 31, 2021, the Company has net operating loss carryforwards of approximately $31.1 million and $13.4 million available to reduce future taxable income, for federal and state income tax purposes, respectively. Under the Tax Cuts and Jobs Act, the Federal NOLs of approximately $31.1 million incurred during the years ended after December 31, 2017 can be carried forward indefinitely, but are limited in utilization to 80% of taxable income each year. The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) signed in to law on March 27, 2020, provided that NOLs generated in a taxable year beginning in 2018, 2019, or 2020, may now be carried back five years and forward indefinitely. In addition, the limitation of NOL utilization up to 80% of taxable income limitation is temporarily removed, allowing NOLs to fully offset taxable income. Approximately $26,000 of the federal NOL will expire in 2037. The state net operating loss carryforwards will begin to expire in 2037.
Under the Internal Revenue Code (“IRC”) Section 382, annual use of the Company’s net operating loss carryforwards to offset taxable income may be limited based on cumulative changes in ownership. The Company has not completed an analysis to determine whether any such limitations have been triggered as of December 31, 2021. The Company has no income tax effect due to the recognition of a full valuation allowance on the expected tax benefits of future loss carry forwards based on uncertainty surrounding realization of such assets.
The federal and state tax returns beginning with the year ended December 31, 2017 are currently open for examination under the applicable federal and state income tax statutes of limitations.
The tax effects of the temporary differences and carry forwards that give rise to deferred tax assets consist of the following:
A reconciliation of the statutory income tax rates and the Company’s effective tax rate is as follows:
The Company has not identified any uncertain tax positions requiring a reserve as of December 31, 2021 and March 31, 2021. The Company’s policy is to recognize interest and penalties that would be assessed in relation to the settlement value of unrecognized tax benefits as a component of income tax expense. The Company did not accrue either interest or penalties for the nine months ended December 31, 2021 and the fiscal year ended March 31, 2021.
The Company has not been under tax examination in any jurisdiction for the nine months ended December 31, 2021 and for the fiscal year ended March 31, 2021.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef