Entity information:
8. Income Taxes
 
(Benefit from) provision of income taxes consists of the following:
 
 
 
For The Years Ended March 31,
 
 
 
2017
 
2016
 
Current:
 
 
 
 
 
 
 
Federal
 
$
(81,614)
 
$
(9,979)
 
State
 
 
(6,069)
 
 
66,678
 
 
 
 
(87,683)
 
 
56,699
 
 
 
 
 
 
 
 
 
Deferred:
 
 
 
 
 
 
 
Federal
 
 
25,598
 
 
(81,277)
 
State
 
 
14,590
 
 
(46,459)
 
 
 
 
40,188
 
 
(127,736)
 
 
 
 
 
 
 
 
 
Benefit from income taxes
 
$
(47,495)
 
$
(71,037)
 
 
The Company uses the liability method of accounting for income taxes as set forth in ASC 740. Under the liability method, deferred taxes are determined based on differences between the financial statement and tax bases of assets and liabilities using enacted tax rates. As of March 31, 2017, the Company had federal and California tax net operating loss carryforwards of approximately $19.1 million and $21.3 million, respectively. The federal and California net operating loss carryforwards will expire at various dates from 2026 through 2037. Pursuant to Internal Revenue Code Sections 382 and 383, use of the Company’s net operating loss and credit carryforwards may be limited if a cumulative change in ownership of more than 50% occurs within any three-year period since the last ownership change. The Company may have had a change in control under these Sections. However, the Company does not anticipate performing a complete analysis of the limitation on the annual use of the net operating loss and tax credit carryforwards until the time that it projects it will be able to utilize these tax attributes.
 
Significant components of the Company’s deferred tax assets (liabilities) as of March 31, 2017 and March 31, 2016 are shown below. A valuation allowance of $11,557,356 and $8,369,878 as of March 31, 2017 and March 31, 2016, respectively, has been established against the Company’s deferred tax assets as realization of such assets is uncertain. The Company’s effective tax rate is different from the federal statutory rate of 34% due primarily to operating losses that receive no tax benefit as a result of a valuation allowance recorded for such losses.
 
Deferred tax assets (liabilities) consist of the following:
 
 
 
For The Years Ended March 31,
 
 
 
2017
 
2016
 
Deferred tax assets (liabilities):
 
 
 
 
 
 
 
State taxes
 
$
5,718
 
$
15,114
 
Stock options
 
 
3,127,225
 
 
2,617,037
 
Accrued payroll and related costs
 
 
-
 
 
16,222
 
Accrued hospital pool deficit
 
 
25,747
 
 
329,430
 
Net operating loss carryforward
 
 
7,640,802
 
 
4,754,165
 
Property and equipment
 
 
42,623
 
 
1,588
 
Acquired intangible assets
 
 
113,171
 
 
65,748
 
Other
 
 
518,403
 
 
527,095
 
 
 
 
 
 
 
 
 
Net deferred tax assets before valuation allowance
 
 
11,473,689
 
 
8,326,399
 
Valuation allowance
 
 
(11,557,356)
 
 
(8,369,878)
 
 
 
 
 
 
 
 
 
Net deferred tax liabilities
 
$
(83,667)
 
$
(43,479)
 
 
The provision for income taxes differs from the amount computed by applying the federal income tax rate as follows:
 
 
 
For The Years Ended March 31,
 
 
 
2017
 
 
2016
 
Tax provision at U.S. Federal statutory rates
 
 
34.0
%
 
 
34.0
%
State income taxes net of federal benefit
 
 
(0.1)
%
 
 
(0.3)
%
Nondeductible permanent items
 
 
0.7
%
 
 
(0.7)
%
Nontaxable entities
 
 
0.3
%
 
 
5.4
%
Other
 
 
(3.4)
%
 
 
1.9
%
Change in valuation allowance
 
 
(31.0)
%
 
 
(39.4)
%
 
 
 
 
 
 
 
 
 
Effective income tax rate
 
 
0.5
%
 
 
0.9
%
 
As of March 31, 2017 and March 31, 2016, the Company does not have any unrecognized tax benefits related to various federal and state income tax matters. The Company will recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense.
 
The Company is subject to U.S. federal income tax as well as income tax of multiple state tax jurisdictions. The Company and its subsidiaries’ federal income tax returns are open to audit under the statute of limitations for the years ended March 31, 2014 onwards and state income tax returns are open to audit under the statute of limitations for the years ended January 31, 2013 onward. The Company does not anticipate material unrecognized tax benefits within the next 12 months.