Sonoma Pharmaceuticals, Inc. Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

12 Months Ended

Mar. 31, 2023

Schedule of income tax provision domestic and foreign
	Year Ended March 31,
	2023			2022
Domestic	$	(988,000	)	$	(3,516,000	)
Foreign		(4,194,000	)		(1,883,000	)
	$	(5,182,000	)	$	(5,399,000	)

Schedule of income tax provisions
	Year Ended March 31,
	2023			2022
Current:
State	$	2,000		$	8,000
Foreign		–			469,000
Current Income Tax Expense		2,000			477,000
Deferred:
Federal		–			–
State		–			–
Foreign		(35,000	)		(809,000	)
Total deferred income tax	$	(33,000	)	$	(332,000	)

Schedule of reconciliation of federal income tax rate to effective rate
	Year Ended March 31,
	2023			2022
Expected federal statutory rate		21.0%			21.0%
State income taxes		0.8%			5.7%
Foreign earnings taxed at different rates		6.5%			3.7%
Foreign tax true-up		–			–
Effect of permanent differences		(7.5%	)		(3.0%	)
Effect of intercompany interest permanent differences		(16.1%	)		(12.3%	)
True-up of state deferred assets		1.3%			(25.6%	)
Total effective rate		6.0%			(10.5%	)
Change in valuation allowance		(5.4%	)		16.7%
Totals		0.6%			6.2%

Schedule of deferred tax assets
	March 31,
	2023			2022
Deferred tax assets:
Net operating loss carryforwards	$	28,558,000		$	28,224,000
Research and development tax credit carryforwards		1,800,000			1,850,000
Stock-based compensation		739,000			309,000
Reserves and accruals		795,000			1,336,000
Other deferred tax assets		20,000			–
Lease liability		24,000			63,000
Gross deferred tax assets	$	31,936,000		$	31,782,000

Less valuation allowance		(30,809,000	)		(30,613,000	)

Total deferred tax assets	$	1,127,000		$	1,169,000

Deferred tax liabilities:
Fixed assets		(16,000	)		(17,000	)
Prepaid expenses		(138,000	)		(260,000	)
Right of Use asset		(24,000	)		(63,000	)
Gross deferred tax liabilities		(178,000	)		(339,000	)
Net deferred tax assets	$	949,000		$	829,000