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Income Taxes | 12 Months Ended
--- | ---
Mar. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities are as follows (in thousands):
| March 31,
| 2024 |  | 2023
Deferred tax assets: |  |  |
Accrued sales tax liability | $ | 5,126 |  |  | $ | 5,910 |
Other accrued expenses | 225 |  |  | — |
Deferred stock compensation | 680 |  |  | 1,605 |
Deferred revenue | 31 |  |  | — |
Bad debt and inventory reserves | 440 |  |  | 21 |
Capitalized research and development costs | 317 |  |  | — |
Lease liabilities | 376 |  |  | — |
Net operating loss carryforward | 3,001 |  |  | — |
Total deferred tax assets | 10,195 |  |  | 7,536 |
Deferred tax liabilities: |  |  |
Tax accounting method change | (541) |  |  | — |
Intangible assets | (2,627) |  |  | — |
Property and equipment | (1,041) |  |  | (2,527) |
Right of use assets | (376) |  |  | — |
Total deferred tax liabilities | (4,585) |  |  | (2,527) |
Valuation allowance | (624) |  |  | — |
Total net deferred tax assets | $ | 4,986 |  |  | $ | 5,009 |
At March 31, 2024, the Company had $11.3 million of federal net operating loss carryforwards which begin to expire in fiscal 2024. The Company also had $9.0 million in state net operating loss carryforwards which begin to expire in fiscal 2026. In fiscal 2024 the Company acquired PetCareRx, a loss corporation. The tax attributes acquired are subject to Internal Revenue Code Section 382 which limits the utilization annually. The Company has determined the utilization of the state loss carryforwards is not likely to be realized. As a result, the Company has recorded a valuation allowance of $0.6 million for the tax effected value of these state losses. Outlined below are the tax attributes acquired and the balances remaining as of March 31, 2024 (in thousands).
PetCareRx Tax Attributes Acquired |  | Total |  | Sec. 382 limited utilization |  | Attributes for which a deferred tax asset is recorded | Expiration
Federal net operating losses - limited carryover |  | 85,454 |  | 83,300 |  | 2,154 | Beginning in FY 2024
Federal net operating losses - unlimited carryover |  | 10,501 |  | — |  | 10,501 | None
Disallowed business interest expense carryover |  | 1,855 |  | — |  | 1,855 | None
State net operating losses |  | 11,040 |  | 2,066 |  | 8,974 | Beginning in FY 2026
Tax Attribute as of March 31, 2024 |  | Total |  | Sec. 382 limited utilization |  | Attributes for which a deferred tax asset is recorded | Expiration
Federal net operating losses - limited carryover |  | 84,114 |  | 83,300 |  | 814 | Beginning in FY 2025
Federal net operating losses - unlimited carryover |  | 10,501 |  | — |  | 10,501 | None
Disallowed business interest expense carryover |  | — |  | — |  | 0 | None
State net operating losses |  | 11,040 |  | 2,066 |  | 8,974 | Beginning in FY 2026
The components of the income tax provision consist of the following (in thousands):
| Year Ended March 31,
| 2024 |  | 2023 |  | 2022
Current taxes |  |  |  |  |
Federal | $ | 490 |  |  | $ | 2,623 |  |  | $ | 5,802 |
State | 408 |  |  | 1,312 |  |  | 514 |
Total current income tax provision | 898 |  |  | 3,934 |  |  | 6,316 |
Deferred income tax provision (benefit) |  |  |  |  |
Federal | 412 |  |  | (453) |  |  | (778) |
State | (119) |  |  | (1,176) |  |  | (69) |
Total deferred taxes | 293 |  |  | (1,629) |  |  | (847) |
Total income tax provision | $ | 1,191 |  |  | $ | 2,305 |  |  | $ | 5,469 |
The reconciliation of income tax provision computed at the U.S. federal statutory tax rates to income tax expense is as follows (in thousands):
| Year Ended March 31,
| 2024 |  | 2023 |  | 2022
Income taxes at federal statutory rates | $ | (1,317) |  |  | $ | 1,564 |  |  | $ | 5,078 |
State income taxes, net of federal tax benefit | 304 |  |  | 107 |  |  | 428 |
Non-deductible executive compensation | 1,771 |  |  | — |  |  | — |
Other permanent differences | 105 |  |  | 340 |  |  | 116 |
Restricted stock shortfall adjustment | 281 |  |  | 171 |  |  | 31 |
Deferred tax adjustments | 47 |  |  | — |  |  | — |
Other | — |  |  | 124 |  |  | (184) |
Total income tax provision | $ | 1,191 |  |  | $ | 2,305 |  |  | $ | 5,469 |
In fiscal 2024, the Company recognized non-deductible executive stock compensation of approximately $1.8 million. This includes adjusting the deferred tax assets by a cumulative $1.0 million to account for future limitations under Sec. 162(m). This limits deductions for compensation of covered executives to $1.0 million per individual. In fiscal 2023, the Company recognized a stock compensation shortfall charge of approximately $171 thousand, and recognized a one-time charge of approximately $124 thousand, related to a return to provision true up from the fiscal 2022 income tax provision. In fiscal 2022, the Company recognized a stock compensation shortfall charge of approximately $31 thousand, and recognized a one-time benefit of approximately $184 thousand, related to a return to provision true up from the fiscal 2021 income tax provision. The differences between the effective income tax rate and the statutory U.S. federal income tax rate are as follows:
| Year Ended March 31,
| 2024 |  | 2023 |  | 2022
Federal rate on income before taxes | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal tax benefit | (4.9) | % |  | 1.4 | % |  | 1.8 | %
Non-deductible executive compensation | (28.2) | % |  | — | % |  | — | %
Other permanent differences | (1.7) | % |  | 4.6 | % |  | 0.5 | %
Restricted stock shortfall adjustment | (4.5) | % |  | 2.3 | % |  | 0.1 | %
Deferred tax adjustments | (0.8) | % |  | — | % |  | — | %
Other | — | % |  | 1.7 | % |  | (0.8) | %
Total Effective Tax Rate | (19.0) | % |  | 31.0 | % |  | 22.6 | %

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- Definition 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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