NCM Services Inc. (NCMV)

[zen222]

WOW! $123,000,000 in federal tax loss carryforwards and a many millions more in other tax credits!

PROVISION FOR INCOME TAXES

We account for income taxes in accordance with Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." Income tax expense consists of
foreign income tax withholding on foreign source royalties paid us. As of March
31, 2004, we had net operating loss carryforwards for U.S. federal income tax
purposes of approximately $123,000,000 and for U.K. income tax purposes of
approximately $3,860,000 and for state income tax purposes of approximately
$31,770,000. We also had research and development credit carryforwards for
federal income tax purposes of approximately $3,426,000 and for state income tax
purposes of approximately $1,506,000. Utilization of our U.S. net operating loss
and research credit carryforwards will be subject to annual limitations based on
the "change of ownership" provisions of the Tax Reform Act of 1986. These
limitations may result in the expiration of net operating loss and research
credit carryforwards before utilization.

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