| Income Taxes |
| For the year ended December 31, 2019 and 2018, loss before income tax provision consisted of the following: |
| |
|
December 31, 2019 |
|
|
December 31, 2018 |
|
| |
|
|
|
|
|
|
| Domestic operations - Canada |
|
$ |
(5,027,596 |
) |
|
$ |
(2,744,792 |
) |
| Foreign operaions - United States |
|
|
(91,550 |
) |
|
|
- |
|
| Total loss before taxes |
|
$ |
(5,119,146 |
) |
|
$ |
(2,744,792 |
) |
| Income tax expense (benefit) consists of the following for the years ended December 31, 2019 and December 31, 2018: |
| |
|
December 31, 2019 |
|
|
December 31, 2018 |
|
| |
|
|
|
|
|
|
| Loss before taxes |
|
$ |
(5,119,146 |
) |
|
$ |
(2,744,792 |
) |
| Statutory tax rate |
|
|
27.00 |
% |
|
|
27.00 |
% |
| Income taxes at the statutory rate |
|
$ |
(1,382,170 |
) |
|
$ |
(741,094 |
) |
| Stock-based compensation |
|
|
108,505 |
|
|
|
56,247 |
|
| Share issue costs |
|
|
(223,439 |
) |
|
|
(12,371 |
) |
| Write-down of shares issued in R&D expense |
|
|
- |
|
|
|
132,843 |
|
| Others |
|
|
(58,416 |
) |
|
|
27,847 |
|
| Total |
|
$ |
(1,555,520 |
) |
|
$ |
(536,528 |
) |
| |
|
|
|
|
|
|
|
|
| Valuation Allowance |
|
$ |
1,555,520 |
|
|
$ |
536,528 |
|
| Total income tax expense (benefit) |
|
|
- |
|
|
|
- |
|
| The reconciliations of the statutory tax rate to the effective income tax rate for the years ended December 31, 2019 and December 31, 2018 is as follows: |
| |
|
December 31, 2019 |
|
|
December 31, 2018 |
|
| Tax provision at statutory rates |
|
|
27 |
% |
|
|
27 |
% |
| Stock based compensation |
|
|
(2 |
)% |
|
|
(2 |
)% |
| Share issue costs |
|
|
4 |
% |
|
|
1 |
% |
| Write-down of shares issued in R&D expense |
|
|
0 |
% |
|
|
(5 |
)% |
| Others |
|
|
1 |
% |
|
|
(1 |
)% |
| Valuation allowance |
|
|
(30 |
)% |
|
|
(20 |
)% |
| Effective income tax rate |
|
|
- |
|
|
|
- |
|
| Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not that we will not realize those tax assets through future operations. Significant components of the Company’s deferred taxes are as follows: |
| |
|
December 31, 2019 |
|
|
December 31, 2018 |
|
| Deferred tax assets: |
|
|
|
|
|
|
|
|
| Unused tax losses carry forward - Canada and United States |
|
$ |
1,903,392 |
|
|
$ |
527,169 |
|
| Share issue costs - Canada |
|
|
186,874 |
|
|
|
9,793 |
|
| Property and equipment - Canada |
|
|
1,782 |
|
|
|
(434 |
) |
| Total deferred tax assets |
|
$ |
2,092,048 |
|
|
$ |
536,528 |
|
| Deferred tax asset not recognized |
|
|
- |
|
|
|
- |
|
| |
|
|
- |
|
|
|
- |
|
| Net deferred tax assets |
|
|
2,092,048 |
|
|
|
536,528 |
|
| |
|
|
|
|
|
|
|
|
| Deferred tax liability: |
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
| Total deferred tax liability |
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
| Valuation Allowance |
|
$ |
(2,092,048 |
) |
|
$ |
(536,528 |
) |
| Net deferred tax assets (liabilities) |
|
$ |
- |
|
|
$ |
- |
|
The Company has Non-Capital Losses of $6.8
million as of December 31, 2019 and $2 million as of December 31, 2018, which are due to expire between 2038 and 2039 and which
can be used to offset future taxable income in Canada. For foreign operations in United States, aggregate net operating losses
are $91,550 as of December 31, 2019 (2018 - $nil) which can be carried forward indefinitely. Non-Capital Losses in Canada can
be carried forward after change of ownership, if the particular business which gave rise to the loss is carried on by the company
for profit or with a reasonable expectation of profit. Certain accumulated net operating losses in United States are subject to
an annual limitation from equity shifts, which constitute a change of ownership as defined under Internal Revenue Code (“IRC”)
Section 382. These rules will limit the utilization of the losses.
|