Annual report pursuant to Section 13 and 15(d)


12 Months Ended
Mar. 31, 2022
Income Tax Disclosure [Abstract]  



For the years ended March 31, 2022 and 2021, we had no income tax expense due to our net operating losses and 100% deferred tax asset valuation allowance.


At March 31, 2022 and 2021, we had net deferred tax assets as detailed below. These deferred tax assets are primarily composed of capitalized research and development costs and tax net operating loss carryforwards. Due to uncertainties surrounding our ability to generate future taxable income to realize these assets, a 100% valuation allowance has been established to offset the net deferred tax assets.


Significant components of our net deferred tax assets at March 31, 2022 and 2021 are shown below:

    2022     2021  
Deferred tax assets:                
Capitalized research and development   $ 3,442,000     $ 3,442,000  
Net operating loss carryforwards1     22,039,000       19,921,000  
Stock compensation     1,609,000       1,399,000  
Total deferred tax assets     27,090,000       24,762,000  
Total deferred tax liabilities            
Net deferred tax assets     27,090,000       24,762,000  
Valuation allowance for deferred tax assets     (27,090,000 )     (24,762,000 )
Net deferred tax assets   $     $  


At March 31, 2022, we had tax net operating loss carryforwards for federal and state purposes approximating $87 million and $69 million, portions of which began to expire in the year 2021.


The provision for income taxes on earnings subject to income taxes differs from the statutory federal rate for the years ended March 31, 2022 and 2021 due to the following:

    2022     2021  
Income taxes (benefit) at federal statutory rate of 21.00%   $ (2,188,000 )   $ (1,657,000 )
Tax effect on non-deductible expenses and credits     1,000       1,000  
True up items     (5,000 )     25,000  
Expiration of net operating loss carryforwards (1)     593,000       427,000  
Change in valuation allowance     1,599,000       1,204,000  
Income Tax Expense (Benefit)    $     $  


(1) Pursuant to Internal Revenue Code Section 382, use of our tax net operating loss carryforwards may be limited.


ASC 740, “Income Taxes”, clarifies the accounting for uncertainty in income taxes recognized in an entity's financial statements, and prescribes recognition thresholds and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under ASC 740, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense. During the years ended March 31, 2022 and 2021, we did not recognize any interest or penalties relating to tax matters.


At and for the years ended March 31, 2022 and 2021, management does not believe the Company has any uncertain tax positions. Accordingly, there are no unrecognized tax benefits at March 31, 2022 or March 31, 2021.


Our tax returns remain open for examination by the applicable authorities, generally 3 years for federal and 4 years for state. We are currently not under examination by any taxing authorities.