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Income Taxes | 12 Months Ended
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Mar. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | NOTE 10 - INCOME TAXES The Company files separate tax returns in the United States and in Macau, China. The Macau Subsidiary has received approval from the Macau government to operate its business as a Macau Offshore Company (MOC), and is exempt from the Macau income tax. For the fiscal years ended March 31, 2018 and 2017, the Macau Subsidiary recorded no tax provision. The U.S. Federal net operating loss carryforward is subject to an IRS Section 382 limitation. As of March 31, 2018 and 2017, the Company had net deferred tax assets of approximately $0.9 million and $1.5 million, respectively. On December 22, 2017 the Tax Act was enacted which reduces the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018. As a result of the Tax Act we have determined our blended rate for the fiscal year ending March 31, 2018 was approximately 28.4% and we recorded a tax provision of approximately $0.2 million. As of March 31, 2018 we have completed our analysis for all of the tax effects of the Tax Act and have recognized an additional tax provision of approximately $0.3 million primarily related to the revaluation of our net deferred tax assets. The income tax provision for federal, foreign, and state income taxes in the consolidated statements of income consisted of the following components for 2018 and 2017:
|  | 2018 |  |  | 2017 |
Income tax provision: |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | - |  |  | $ | 87,751 |
State |  |  | - |  |  |  | - |
Total current Federal and State |  | $ | - |  |  | $ | 87,751 |
Deferred: |  |  |  |  |  |  |  |
Federal |  | $ | 587,995 |  |  | $ | 849,983 |
State |  |  | (43,118 | ) |  |  | 79,339 |
Total Deferred Federal and State |  | $ | 544,877 |  |  | $ | 929,322 |
Total income tax provision |  | $ | 544,877 |  |  | $ | 1,017,073 |
The United States and foreign components of income before income taxes are as follows:
|  | 2018 |  |  | 2017 |
United States |  | $ | 469,182 |  |  | $ | 2,507,010 |
Foreign |  |  | 228,181 |  |  |  | 216,261 |
|  | $ | 697,363 |  |  | $ | 2,723,271 |
The actual tax provision differs from the “expected” tax expense for the years ended March 31, 2018 and 2017 (computed by applying the U.S. Federal Corporate tax rate of 34 percent to income before taxes) as follows:
|  | 2018 |  |  | 2017 |
Expected tax expense |  | $ | 212,657 |  |  | $ | 925,912 |
State income taxes, net of Federal income tax benefit |  |  | 10,341 |  |  |  | 36,195 |
Permanent differences |  |  | 12,716 |  |  |  | 11,559 |
Deemed Dividend |  |  | 70,267 |  |  |  | 73,521 |
Change in income tax rate |  |  | 346,062 |  |  |  | - |
Tax rate differential on foreign earnings |  |  | (70,267 | ) |  |  | (73,529 | )
Other |  |  | (36,899 | ) |  |  | 43,415 |
Actual tax provision |  | $ | 544,877 |  |  | $ | 1,017,073 |
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows:
|  | 2018 |  |  | 2017 |
Deferred tax assets: |  |  |  |  |  |  |  |
Federal net operating loss carryforward |  | $ | 263,231 |  |  | $ | 476,003 |
State net operating loss carryforward |  |  | 289,584 |  |  |  | 242,418 |
AMT credit carryforward |  |  | 92,723 |  |  |  | 139,754 |
Inventory differences |  |  | 190,327 |  |  |  | 436,695 |
Allowance for doubtful accounts |  |  | 18,462 |  |  |  | 46,837 |
Reserve for sales returns |  |  | 55,505 |  |  |  | 79,026 |
Stock option compensation expense |  |  | 104,676 |  |  |  | 93,178 |
Accrued expenses |  |  | 30,017 |  |  |  | 46,589 |
Total deferred tax assets |  |  | 1,044,525 |  |  |  | 1,560,500 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation |  |  | (76,364 | ) |  |  | (81,291 | )
Prepaid expenses |  |  | (31,024 | ) |  |  | - |
Net deferred tax assets |  | $ | 937,137 |  |  | $ | 1,479,209 |
The company performed an analysis in accordance with the provisions of ASC 740, which require an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. The analysis performed to assess the realizability of the deferred tax assets included an evaluation of the pattern and timing of the reversals of temporary differences and the length of carryback and carryforward periods available under the applicable federal and state laws; and the amount and timing of future taxable income. As of March 31, 2018 the analysis indicated that it is more likely than not that the deferred tax assets recorded will be realized. At March 31, 2018, the Company has federal tax net operating loss carryforwards in the amount of approximately $1.4 million that begin to expire in the year 2029. The net operating loss carryforward is subject to an IRS Section 382 limitation. There is approximately $0.2 million per year available to use beginning in Fiscal 2018. In addition, the Company has state tax net operating loss carryforwards in the amount of approximately $5.6 million that will begin to expire beginning in 2025. The Company is no longer subject to income tax examinations for fiscal years before 2015.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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