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Income Taxes | 12 Months Ended
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Mar. 31, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | Note 12. Income Taxes Income tax expense (benefit) consists of the following for the years ended March 31, 2025 and 2024:
|  | (In thousands) |
|  | Fiscal Year Ended March 31, |
|  |  | 2025 |  |  |  | 2024 |
Current: |  |  |  |  |  |
U.S. federal |  | $ | - |  |  | $ | - |
State & local |  |  | - |  |  |  | - |
Foreign |  |  | - |  |  |  | - |
Total current |  | $ | - |  |  | $ | - |
Deferred: |  |  |  |  |  |
U.S. federal |  | $ | 63 |  |  | $ | - |
State & local |  |  | - |  |  |  | - |
Foreign |  |  | - |  |  |  | - |
Total deferred |  | $ | 63 |  |  | $ | - |
Total tax provision (benefit) |  | $ | 63 |  |  | $ | - |
On April 26, 2024, the Company sold substantially all of the finance receivables and all of the repossessed assets to Westlake Services, LLC. As the sale required the reporting of this business line as discontinued operations, which are reported net of tax, the tax provision related discontinued operations is removed from the total provision reported in the income statement for US GAAP purposes. The discontinued operations tax provision for the year ended March 31, 2025 was $0 on approximately $3.0 million of pre-tax income. For the years ended March 31, 2025 and 2024, the loss from continuing operations before income taxes was $8.3 million and $6.1 million, respectively. The Company had an effective tax rate of (0.76%) and 0.00% for the years ended March 31, 2025 and 2024, respectively. The reconciliation of the U.S. statutory federal income tax rate to the Company’s effective tax rate for the years ended March 31, 2025 and 2024 were as follows:
|  | (In thousands) |
|  | Fiscal Year Ended March 31, |
|  |  | 2025 |  |  | Percentage |  |  | 2024 |  |  | Percentage |
U.S. federal tax expense at the statutory rate |  | $ | (1,741 | ) |  |  | 21.00 | % |  | $ | (1,281 | ) |  |  | 21.00 | %
Increase (decrease) in income taxes resulting from: |  |  |  |  |  |  |  |  |  |  |  |
State tax, net of federal benefit |  |  | (241 | ) |  |  | 2.91 | % |  |  | (226 | ) |  |  | 3.71 | %
Loss on dissenting shares |  |  | 265 |  |  |  | -3.20 | % |  |  | - |  |  |  | 0.00 | %
Change in valuation allowance |  |  | 1,138 |  |  |  | -13.73 | % |  |  | 972 |  |  |  | -15.94 | %
Transaction costs |  |  | 233 |  |  |  | -2.81 | % |  |  | - |  |  |  | 0.00 | %
Impact of other permanent differences |  |  | 409 |  |  |  | -4.93 | % |  |  | 535 |  |  |  | -8.77 | %
|  | $ | 63 |  |  |  | -0.76 | % |  | $ | - |  |  |  | 0.00 | %
The net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used of income tax purposes are reflected in deferred income taxes. Significant components of the Company's deferred tax assets as of March 31, 2025 and 2024 consist of the following:
|  | (In thousands) |
|  | March 31, 2025 |  |  | March 31, 2024 |
Unrealized fair value adjustment |  | $ | - |  |  | $ | 4,162 |
Share based compensation |  |  | - |  |  |  | 30 |
Federal and state net operating loss carryforward |  |  | 16,692 |  |  |  | 9,816 |
Right of use liability |  |  | 627 |  |  |  | 15 |
Other |  |  | 86 |  |  |  | 50 |
Total deferred tax assets |  |  | 17,405 |  |  |  | 14,073 |
Valuation allowance |  |  | (15,185 | ) |  |  | (14,047 | )
Gross deferred tax assets |  |  | 2,220 |  |  |  | 26 |
Right of use assets |  |  | (666 | ) |  |  | (15 | )
Fixed assets |  |  | (5,109 | ) |  |  | - |
Intangible assets |  |  | (604 | ) |  |  | - |
Other |  |  | (147 | ) |  |  | (11 | )
Gross deferred tax liabilities |  |  | (6,526 | ) |  |  | (26 | )
Net deferred tax liabilities |  | $ | (4,306 | ) |  | $ | - |
The Company has Federal and State net operating loss (“NOLs”) carryforwards of approximately $70.1 million and $61.0 million respectively, as of March 31, 2025. The Federal NOLs were generated after December 31, 2017 with an infinite carryforward period but are subject to 80% deduction limitation based upon pre-NOL deduction taxable income. State NOLs generated have various expiration rules and dates with the first amount of NOLs expiring in 2033. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on consideration of these items, management has determined that enough uncertainty exists relative to the realization of the deferred income tax asset balances to warrant the application of a valuation allowance as of March 31, 2025 and 2024. Future utilization of the Company’s net operating loss carryforwards to offset future taxable income may be subject to an annual limitation, pursuant to IRC Sections 382 and 383, as a result of ownership changes that may have occurred or that could occur in the future. An ownership change occurs when a cumulative change in ownership of more than 50% occurs within a three-year period. The Company has not completed an IRC Section 382/383 analysis regarding the limitation of net operating loss carryforwards. When this analysis is finalized, the Company plans to update its unrecognized tax benefits accordingly. In accordance with ASC 740, Income Taxes, specifically related to uncertain tax positions, a Company is required to use a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company believes its income tax filing positions and deductions will be sustained upon examination, and accordingly, no reserves or related accruals for interest and penalties have been recorded as of March 31, 2025. The Company is subject to taxation in the United States federal and state jurisdictions. The Company’s federal income tax and state income tax returns are subject to examination by tax authorities. Its statute of limitations is still open to the extent of the net operating losses generated within each particular year. The Company is not currently under examination by any tax authority.

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