General form of registration statement for all companies including face-amount certificate companies

Income Taxes

v3.20.4
Income Taxes
12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes
9. 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.