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INCOME TAXES
 12 Months Ended
Mar. 31, 2025
Income Taxes  
INCOME TAXES

13. INCOME TAXES

 

Components of income tax (benefit) expense were as follows:

  

   March 31, 2025   March 31, 2024 
     

Year Ended

March 31, 2025

      

Year Ended

March 31, 2024

  
                 
Current   $ -     $ -  
Deferred     -       -  
Total income tax (benefit) expense   $ -     $ -  

 

The following is a reconciliation of the federal statutory rate to the Company’s effective income tax rate:

  

     

Year Ended

March 31, 2025

      

Year Ended

March 31, 2024

  
     

Year Ended

March 31, 2025

      

Year Ended

March 31, 2024

  
                 
Statutory rate     21.0  %     21.0 %
Change in valuation allowance     (21.1 )     (13.9 )
Foreign tax differential     (1.2 )     (1.2 )
Permanent differences     1.3       (5.9 )
Effective rate     0.0 %     0.0 %

 

 

The tax effects of temporary cumulative differences which give rise to deferred tax assets and liabilities are summarized as follows:

  

   March 31, 2025   March 31, 2024 
         
Deferred tax liabilities:          
Fixed and intangible assets  $175   $113 
Inventory   -    - 
Total deferred tax liabilities   175    113 
Deferred tax assets:          
Tax loss carryforward   10,284    7,312 
Stock compensation expense   815    535 
IPO expenses   163    163 
Valuation allowance   (11,087)   (7,897)
Total deferred tax assets   175    113 
Deferred tax assets, net  $-   $- 

 

During the years ended March 31, 2025 and 2024, the Company recorded an increase in the valuation allowance of $3,190 and $1,449, respectively, related to federal deferred tax assets. Deferred tax assets are recorded related to net operating losses and temporary differences between the book and tax bases of assets and liabilities expected to produce tax deductions in future periods. The realization of these assets depends on recognition of sufficient future taxable income in specific tax jurisdictions in which those temporary differences or net operating losses are deductible.

 

Throughout the year ended March 31, 2025, the Company has been assessing the realizability of its deferred tax assets by considering positive factors such as the next three years’ profit projection making it more likely than not that the Company will be able to recognize a deferred tax asset on losses. Based upon historical performance of the Company, a valuation allowance of 100% was recorded as there is currently no significant evidence to indicate realizability of deferred tax assets. During the years ended March 31, 2025 and 2024, the Company recorded a valuation allowance of 100% of UK and Hong Kong losses.

 

The Company is subject to US federal income tax, as well as income tax in multiple US state and local jurisdictions and a number of foreign jurisdictions. Returns for the years since fiscal year 2022 are still open based on statutes of limitation only.