• Filing Date: 2019-06-14
  • Form Type: 10-K
  • Description: Annual report
v3.19.2
INCOME TAXES
12 Months Ended
Mar. 31, 2019
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 8 – INCOME TAXES

 

The Company and its subsidiaries file separate income tax returns.

 

The United States of America

 

The Company is incorporated in the US and is subject to a US federal corporate income tax rate of 21% for the year ended March 31, 2019. As a result of the US Tax Cuts and Jobs Act, the Company was subject to a US federal corporate income tax blended rate of 30.79% for the year ended March 31, 2018 and 35% for the year ended March 31, 2017.

 

British Virgin Islands

 

RGL is incorporated in the British Virgin Islands (“BVI”). Under the current laws of the BVI, RGL is not subject to tax on income or capital gains. In addition, upon payments of dividends by RGL, no BVI withholding tax is imposed. During the years ended March 31, 2019, 2018 and 2017, there was no income or expenses in the BVI.

 

UK

 

DDL, TCL and DDHL are all incorporated in the United Kingdom (UK) and the applicable UK statutory income tax rate for these companies is 19%.

 

For the years ended March 31, 2019, 2018 and 2017 loss before income tax expense (benefit) arose in the UK and U.S. as follows:

 

    Year Ended March 31,
    2019   2018   2017
      $       $       $  
Loss before income taxes arising in UK     (2,726,862 )     (1,353,243 )     (1,251,870 )
Loss before income taxes arising in United States     (1,725,935 )     (467,206 )     (299,396 )
Total loss before income tax     (4,452,797 )     (1,820,449 )     (1,551,266 )

 

 

Reconciliation of our effective tax rate to loss to the statutory U.S federal tax rate is as follows:

 

    Year Ended March 31,
    2019   2018   2017
      $               $               $          
Loss before income taxes     (4,452,797 )             (1,820,449 )             (1,551,266 )        
Expected tax benefit     (935,000 )     (21 %)     (561,000 )     (31 %)     (527,000 )     (34 %)
Foreign tax differential     55,000       1 %     36,000       2 %     270,000       17 %
Enhanced research and development     (297,000 )     (7 %)     (215,000 )     (12 %)     (198,000 )     (13 %)
Other     1,000       0 %     35,000       2 %     —         —    
Change in valuation allowance     1,176,000       26 %     705,000       39 %     455,000       29 %
Actual income tax benefit     —         —         —         —         —         —    

 

The tax effects of the temporary differences that give rise to significant portions of deferred income tax assets are presented below:

 

    Year Ended March 31,
    2019   2018
      $       $  
Net operating tax loss carried forwards     2,641,000       1,627,000  
Research and development enhancement     867,000       602,000  
Other items     (103,000 )     —    
Valuation allowance     (3,405,000 )     (2,229,000 )
                 
Net deferred tax assets     —         —    

 

 

For each of the years ended March 31, 2019, 2018 and 2017, the Company did not have unrecognized tax benefits, and therefore no interest or penalties related to unrecognized tax benefits were accrued. Management does not expect that the amount of unrecognized tax benefits will change significantly within the next twelve months.

The Company mainly files income tax returns in the United States and the UK. The Company is subject to U.S. federal income tax examination by tax authorities for tax years beginning in 2015.   The UK tax returns for the Company’s UK subsidiaries are open to examination by the UK tax authorities for the tax years beginning in April 1, 2013.

As of March 31, 2019, the Company has net operating losses (NOLs) of approximately $3.2 million in the U.S. and $11.5 million in the UK. NOLs may be carried forward indefinitely. Additionally, the Company has a research and development enhancement deduction carry forward of approximately $5.1 million for purposes of UK income tax filings.