• Filing Date: 2019-01-11
  • Form Type: 10-Q
  • Description: Quarterly report
v3.10.0.1
Income Taxes
3 Months Ended
Nov. 30, 2018
Income Tax Disclosure [Abstract]  
Income Taxes

Note 7. Income Taxes

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets at November 30, 2018 and August 31, 2018 are as follows: 

   November 30,
2018
  August 31,
2018
Deferred tax assets:          
Net operating loss carryforwards  $135,500   $131,871 
Capitalized research and development   -------    —   
Research and development credit carry forward   1,963    1,963 
Total deferred tax assets   137,643    133,834 
           
Less: valuation allowance   (137,643)   (133,834)
           
Net deferred tax asset  $—     $—   

 

The net decrease in the valuation allowance for deferred tax assets was $3,629 for the three months ended November 30, 2018. The Company evaluates its valuation allowance on an annual basis based on projected future operations. When circumstances change and this causes a change in management’s judgment about the realizability of deferred tax assets, the impact of the change on the valuation allowance is reflected in current operations.

 

For federal income tax purposes, the Company has net U.S. operating loss carry forwards at November 30, 2018 available to offset future federal taxable income, if any, of $618,127, which will fully expire by the fiscal year ended August 31, 2035.  Accordingly, there is no current tax expense for the three ended November 30, 2018 and November 30, 2017. In addition, the Company has research and development tax credit carry forwards of $1,963 at November 30, 2018, which are available to offset federal income taxes and fully expire by August 31, 2028.

 

The utilization of the tax net operating loss carry forwards may be limited due to ownership changes that have occurred as a result of sales of common stock.

 

The effects of state income taxes were insignificant for the three ended November 30, 2018 and November 30, 2017.

  

The following is a reconciliation between expected income tax benefit and actual, using the applicable statutory income tax rate of 21% and 34%, respectively for the three months ended November 30, 2018 and 2017:

 

   November 30,
   2018  2017
Income tax benefit at statutory rate  $3,629    8,823 
Change in valuation allowance   (3,629)   (8,823)
   $—        

 

The fiscal years 2012 through 2018 remain open to examination by federal authorities and other jurisdictions in which the Company operates.