5. INCOME TAXES

Significant components of the provision for income taxes are presented below:
   

March 31,
2001

  

March 31,
2000

  

March 31,
1999
   

(in thousands)

Current:

            

    Federal

  

$ (37)       

  

$112       

  

$5,193       

    State

  

106       

  

24       

  

1,172       

Deferred:

            

    Federal

  

250       

  

(22)       

  

(404)       

    State

  

(69)       

  

(5)       

  

(97)       
   

$250       

  

$109       

  

$5,864       

The reconciliation of the consolidated effective tax rate of the Company for the years ended March 31, 2001, 2000 and 1999 is as follows:
   

2001

  

2000

  

1999
   

(in thousands)

Pretax income

  

$276    

  

$128    

  

$13,623    

Statutory income tax rate

  

$  96    

  

$  44    

  

$  4,768    

State taxes, net of federal benefit

  

24    

  

12    

  

699    

Permanent differences

  

134    

  

151    

  

256    

Other

  

(4)    

  

(98)    

  

141    

      Total provision

  

$250    

  

$109    

  

$  5,864    
   

 

The Company’s deferred tax assets are comprised of the following:

   

March 31,
2001

  

March 31,
2000
   

(in thousands)

Allowance for doubtful accounts

  

$151          

  

$   261          

Compensated absence accrual

  

79          

  

88          

Depreciation

  

245          

  

198          

Net operating loss carryforward

  

130          

  

—          

Other accruals

  

257          

  

496          
   

$862          

  

$1,043          

The Company continually reviews the recoverability of its deferred tax assets and would, if necessary, establish a valuation allowance if it is more likely than not that such deferred tax assets will not be realized. At March 31, 2001 and 2000, management believes that it is more likely than not that the tax benefit will be realized for its deferred tax assets.

6. STOCKHOLDERS’ EQUITY

On May 21, 1998, the Company commenced an initial public offering of 2,500,000 shares of common stock, generating proceeds of $23,371,000, net of underwriting commissions and other expenses incurred in connection with the offering. Of the 2,500,000 shares of common stock offered, 2,000,000 shares were offered and sold by the Company and 500,000 shares were offered and sold by certain selling stockholders. In addition, certain underwriters exercised an overallotment option to purchase an additional 375,000 shares of common stock from selling stockholders in June 1998.

In connection with the initial public offering, all issued and outstanding shares of Class A common stock and special common stock converted into 4,032,870 shares of common stock on a share-for-share basis. Holders of the common stock are entitled to one vote per share and to receive dividends, when and if declared by the Company’s Board of Directors.