XML 31 R15.htm IDEA: XBRL DOCUMENT
v3.20.2

Income Taxes | 12 Months Ended
--- | ---
Mar. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | NOTE 9 - INCOME TAXES The Company files separate tax returns in the United States and in Macau. 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, 2020 and 2019, 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, 2020 and 2019, the Company had net deferred tax assets of approximately $1.3 million and $0.8 million, respectively. For the fiscal year ended March 31, 2020 we determined our effective tax rate to be approximately 18.1% and we recorded a tax benefit of approximately $0.6 million which was net of a valuation reserve of approximately $0.1 million for deferred tax assets that will most likely expire prior to the Company’s ability to realize them. For the fiscal year ended March 31, 2019 we determined our effective tax rate to be approximately 20.1% and we recorded a tax provision of approximately $0.2 million. The Company also recorded an income tax receivable of approximately $0.1 million due to the availability of net operating loss carrybacks and alternative minimum tax credits that were realized for the year ended March 31, 2020. The income tax receivable was included as a component of prepaid expenses and other current assets on the accompanying consolidated balance sheet as of March 31, 2020. The income tax(benefit) provision for federal, foreign, and state income taxes in the consolidated statements of income consisted of the following components for 2020 and 2019:
|  | 2020 |  |  | 2019 |
Income tax benefit: |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | (104,437 | ) |  | $ | (19,289 | )
State |  |  | - |  |  |  | - |
Total current Federal and State tax benefit |  | $ | (104,437 | ) |  | $ | (19,289 | )
Deferred: |  |  |  |  |  |  |  |
Federal |  | $ | (521,776 | ) |  | $ | 159,881 |
State |  | $ | (15,601 | ) |  | $ | 18,888 |
Total Deferred Federal and State |  | $ | (537,377 | ) |  | $ | 178,769 |
Total income tax (benefit) provision |  | $ | (641,814 | ) |  | $ | 159,480 |
The United States and foreign components of income (loss) before income taxes are as follows:
|  | 2020 |  |  | 2019 |
United States |  | $ | (3,765,272 | ) |  | $ | 607,652 |
Foreign |  |  | 266,458 |  |  |  | 183,375 |
|  | $ | (3,498,814 | ) |  | $ | 791,027 |
The actual tax provision differs from the “expected” tax expense for the years ended March 31, 2020 and 2019 (computed by applying the U.S. Federal Corporate tax rate of 21 percent to income before taxes) as follows:
|  | 2020 |  |  | 2019 |
Expected tax (benefit) expense |  | $ | (734,751 | ) |  | $ | 166,506 |
State income taxes, net of Federal income tax (benefit) provision |  |  | (175,245 | ) |  |  | 13,478 |
Permanent differences |  |  | 9,977 |  |  |  | 8,282 |
Deemed dividend from foreign subsidiary |  |  | - |  |  |  | 20,813 |
Tax rate differential on foreign earnings |  |  | - |  |  |  | (20,813 | )
Change in valuation allowance |  |  | 87,842 |  |  |  | - |
Effect of IRC §382 on NOL |  |  | 100,966 |  |  |  | - |
Tax rate differential on NOL carryback |  |  | 16,263 |  |  |  | - |
Correction of state rate |  |  | 83,803 |  |  |  | - |
Other |  |  | (30,669 | ) |  |  | (28,786 | )
Actual tax (benefit) provision |  | $ | (641,814 | ) |  | $ | 159,480 |
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows:
|  | 2020 |  |  | 2019 |
NOL Federal Carryforward |  | $ | 312,430 |  |  | $ | 236,476 |
State NOL Carryforward |  |  | 157,967 |  |  |  | 272,758 |
AMT credit carryforward |  |  | - |  |  |  | 19,289 |
General business credit |  |  | 14,196 |  |  |  | - |
Inventory differences |  |  | 303,529 |  |  |  | 176,967 |
Stock option compensation expense |  |  | 128,220 |  |  |  | 109,464 |
Stock warrants |  |  | - |  |  |  | 23,018 |
Allowance for doubtful accounts |  |  | 143,748 |  |  |  | 11,599 |
Insurance contingency |  |  | 220,425 |  |  |  | - |
Reserve for estimated returns |  |  | 112,537 |  |  |  | 67,439 |
Accrued vacation |  |  | 42,928 |  |  |  | 7,945 |
Business interest deduction |  |  | 55,978 |  |  |  | - |
|  |  | 1,491,958 |  |  |  | 924,955 |
Less: valuation allowance |  |  | (87,842 | ) |  |  | - |
|  | $ | 1,404,116 |  |  | $ | 924,955 |
Depreciable and amortizable assets |  |  | (82,512 | ) |  |  | (108,707 | )
Prepaid expenses |  |  | (35,883 | ) |  |  | (57,882 | )
Net deferred tax liability |  |  | (118,395 | ) |  |  | (166,589 | )
Net deferred tax asset |  | $ | 1,285,721 |  |  | $ | 758,366 |
The Company performed an analysis in accordance with the provisions of ASC 740, which requires 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. At March 31, 2020, the Company evaluated the realizability of its deferred tax assets in accordance with GAAP and concluded that a $87,842 valuation allowance against deferred tax assets was necessary. The recognition of the remaining net deferred tax asset and corresponding tax benefit is based upon the Company’s conclusions regarding, among other considerations, the Company’s history of earnings and projected earnings for fiscal year 2021 and in the future. At March 31, 2020, the Company has federal tax net operating loss carryforwards in the amount of approximately $1.7 million that begin to expire in the year 2025. $1.1 million of the net operating loss carryforward is subject to an IRS Section 382 limitation that limits the amount available to use beginning in Fiscal 2020 to approximately $0.15 million per year. In addition the Company has state tax net operating loss carryforwards of approximately $2.0 million that will begin to expire beginning in 2024. The Company is no longer subject to income tax examinations for fiscal years before 2017.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration