Income Taxes

6 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 13 – INCOME TAXES

The following table presents the net deferred tax assets as of September 30, 2019 and March 31, 2019:

	September 30, 2019			March 31, 2019
Net operating loss carryforwards:
Federal	$	(4,008,742	)	$	(3,801,404	)
State		(1,870,746	)		(1,773,989	)
Total net operating loss carryforwards		(5,879,488	)		(5,575,393	)
Total deferred tax assets		(5,879,488	)		(5,575,393	)
Valuation allowance		5,879,488			5,575,393
Net deferred tax assets	$	–		$	–

Current income taxes are based upon the year’s income taxable for federal and state tax reporting purposes. Deferred income taxes (benefits) are provided for certain income and expenses, which are recognized in different periods for tax and financial reporting purposes.

Deferred tax assets and liabilities are computed for differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the period in which the differences are expected to affect taxable income. The Company’s deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses. These loss carryovers would be limited under the Internal Revenue Code should a significant change in ownership occur within a three-year period.

At September 30, 2019 and March 31, 2019, respectively, the Company had net operating loss carryforwards of approximately $19,000,000 and $18,100,000. The deferred tax assets arising from the net operating loss carryforwards are approximately $5,880,000 and $5,580,000 as of September 30, 2019 and March 31, 2019, respectively. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, the projected future taxable income and tax planning strategies in making this assessment. Based on management’s analysis, they concluded not to retain a deferred tax asset since it is uncertain whether the Company can utilize this asset in future periods. Therefore, they have established a full reserve against this asset. The net operating loss carryforwards, if not utilized, will begin to expire in 2021 for federal and Minnesota purposes.

Of the approximately $19,000,000 in net operating loss carryforwards, approximately $7,000,000 has been accumulated in our pre-merger operating subsidiary, Gel-Del Technologies, Inc. IRC 382 provides guidance around whether or not the Company is able to utilize the pre-merger Gel-Del Technologies, Inc. net operating loss of approximately $7,000,000. Management believes that these pre-merger dollars will be allowable if our deferred tax asset is ever realized.

A reconciliation of the expected tax computed at the U.S. statutory federal income tax rate to the total benefit for income taxes at September 30, 2019 and 2018 is as follows:

	2019			2018
Expected tax at 30.8%	$	(5,879,488	)	$	(4,984,867	)
Valuation allowance		5,879,488			4,984,867
Provision for income taxes	$	–		$	–

The Company’s continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of September 30, 2019, and 2018, the Company had no accrued interest and penalties related to uncertain tax positions.

The Company is subject to taxation in the U.S. and Minnesota. Our tax years for 2016 and forward are subject to examination by tax authorities. The Company is not currently under examination by any tax authority.

Management has evaluated tax positions in accordance with FASB ASC 740, and has not identified any tax positions, other than those discussed above, that require disclosure.