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Note 8. Income Taxes
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9 Months Ended |
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Dec. 31, 2011
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| Income Tax Disclosure [Text Block] |
Note
8. Income Taxes
In
the year ended March 31, 2010, the Company completed a study
to assess whether a change in control has occurred that would
affect the ability to monetize tax attributes in future
periods. The Company determined, based on the results of the
study, a change in control did not occur for purposes of
Internal Revenue Code Section 382. The Company, after
considering all available evidence, fully reserved for these
and its other deferred tax assets since it is more likely
than not such benefits will not be realized in future
periods. The Company has incurred losses for financial
reporting and income tax purposes for the three and nine
months ended December 31, 2011. Accordingly, the Company is
continuing to fully reserve for its deferred tax assets. The
Company will continue to evaluate its deferred tax assets to
determine whether any changes in circumstances could affect
the realization of their future benefit. If it is determined
in future periods that portions of the Company’s
deferred income tax assets satisfy the realization standards,
the valuation allowance will be reduced accordingly.
The
Company only recognizes tax benefits from an uncertain tax
position if it is more likely than not that the tax position
will be sustained on examination by the taxing authorities,
based on the technical merits of the position. The tax
benefits recognized in the financial statements from such a
position are measured based on the largest benefit that has a
greater than fifty percent likelihood of being realized upon
ultimate resolution. To date, the Company has not recognized
unrecognized tax benefits in its financial statements.
The
Company files a consolidated U.S. federal income tax return
and a state income tax return in the state of California. The
Company is also subject to filing requirements in foreign
jurisdictions, principally Mexico and The Netherlands. The
Company’s evaluation of uncertain tax matters was
performed for tax years ended through March 31, 2011.
Generally, the Company is subject to audit for the years
ended March 31, 2011, 2010 and 2009 and may be subject to
audit for amounts relating to net operating loss and other
attribute carryforwards generated in periods prior to March
31, 2009. The Company has elected to retain its existing
accounting policy with respect to the treatment of interest
and penalties attributable to income taxes, and continues to
reflect interest and penalties attributable to income taxes,
to the extent they arise, as a component of its income tax
expense. The Company believes that its income tax positions
and deductions would be sustained on audit and does not
anticipate any adjustments, other than those identified above
that would result in a material change to its financial
position. The Company does not have any tax positions for
which it is reasonably possible the total amount of gross
unrecognized tax benefits will increase or decrease within
twelve months of March 31, 2011.
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