INCOME TAXES

12 Months Ended

Mar. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 10 – INCOME TAXES

The Company and its subsidiaries file separate income tax returns.

United States of America

The Company is incorporated in the U.S. and is subject to a U.S. federal corporate income tax rate of 21% for the years ended March 31, 2021 and March 31, 2020.

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, 2021 and 2020, there were no income or expenses in the BVI.

UK

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

For the years ended March 31, 2021 and 2020 loss before income tax benefit arose in the UK and U.S. as follows:

	March 31,
	2021			2020
		$			$
Loss before income taxes arising in UK		(5,030,204	)		(2,470,107	)
Loss before income taxes arising in U.S.		(1,564,224	)		(2,304,451	)
Total loss before income tax benefit		(6,594,428	)		(4,774,558	)

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

	March 31,
	2021					2020
		$					$
Loss before income taxes		(6,594,428	)				(4,774,558	)
Expected tax benefit		(1,384,830	)	(21	%)		(1,003,000	)	(21	%)
Foreign tax differential		100,604		2	%		—		0	%
Enhanced research and development		(259,861	)	(4	%)		(231,000	)	(5	%)
Other		20,226		—			125,000		2	%
Change in rate allowance		—		—			119,000		2	%
Change in valuation allowance		1,523,861		23	%		990,000		21	%
R&D credit received		335,832		5	%		614,362		13	%
Actual income tax benefit		335,832		5	%		614,362		13	%

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

	March 31,
	2021			2020
		$			$
Net operating tax loss carried forward		5,204,000			3,926,000
Research and development enhancement		1,057,000			797,000
Other items		(333,000	)		(319,000	)
Valuation allowance		(5,928,000	)		(4,404,000	)
Net deferred tax assets		—			—

In the year ended March 31, 2021, the Company received $335,832 from HMRC (Her Majesty’s Revenue and Customs) in tax credits relating to the reimbursement of research and development expenses incurred during the year ended March 31, 2020; for the year ended March 31, 2020, the research and development tax credit received was $614,362, relating to expenses incurred for the years ended March 31, 2019 and 2018, respectively. These amounts are reflected as a credit provision for income taxes in the Company’s consolidated statements of operations and comprehensive loss in the respective years received.

For each of the years ended March 31, 2021 and 2020, 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 U.S. and the UK. The Company is subject to U.S. federal income tax examination by tax authorities for tax years beginning in 2017.  The UK tax returns for the Company’s UK subsidiaries are open to examination by the UK tax authorities for the tax years beginning April 1, 2015.

As of March 31, 2021, the Company has net operating losses (“NOLs”) of approximately $7,096,000 in the U.S. and $19,546,000 in the UK. NOLs may be carried forward indefinitely. Additionally, the Company has a research and development enhancement deduction carry forward of approximately $5,561,000 for purposes of UK income tax filings.