Note 10. Income Taxes
No provision has been made for current or deferred income taxes in any period. The statutory tax rate of the Company in Jersey is 0%. The principal operating subsidiaries operate in the United States, the United Kingdom and Switzerland and are subject to corporate income taxes in those countries. All these entities have trading losses available to shelter any taxable profits and accordingly, no corporate income taxes have been provided for. A reconciliation of the income tax expense at the statutory rate to the provision for income taxes is as follows:
|
|
|
Year ended March 31, |
|
|||||||||
|
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|||
|
Income tax expense at statutory rate |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Foreign tax rate differential |
|
|
(1,823 |
) |
|
|
1,106 |
|
|
|
(2,784 |
) |
|
Increase (decrease) in valuation allowance against deferred tax assets |
|
|
1,823 |
|
|
|
(1,106 |
) |
|
|
2,784 |
|
|
Provision for income tax |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Significant components of deferred tax assets are as follows:
|
|
|
March 31, 2017 |
|
|
March 31, 2016 |
|
||
|
Deferred tax assets: |
|
|
|
|
|
|
|
|
|
Provisions and reserves |
|
$ |
1,053 |
|
|
$ |
861 |
|
|
Net operating loss carry forwards |
|
|
7,873 |
|
|
|
6,395 |
|
|
Gross deferred tax assets |
|
$ |
8,926 |
|
|
$ |
7,256 |
|
|
Fixed assets basis difference |
|
$ |
(248 |
) |
|
$ |
(401 |
) |
|
Gross deferred tax liabilities |
|
$ |
(248 |
) |
|
$ |
(401 |
) |
|
Net deferred tax asset |
|
$ |
8,678 |
|
|
$ |
6,855 |
|
|
Valuation allowance |
|
|
(8,678 |
) |
|
|
(6,855 |
) |
|
Total accrued compensation and benefits |
|
$ |
— |
|
|
$ |
— |
|
The Company maintains a valuation allowance on net operating losses and other deferred tax assets in jurisdictions for which it does not believe it is more-likely-than-not to realize those deferred tax assets based upon all available positive and negative evidence, including historical operating performance, carryback periods, reversal of taxable temporary differences, tax planning strategies, and earnings expectations.
As of March 31, 2017, the Company has net operating loss carry forwards of approximately $85,600 and $1,035 of U.S. state net operating losses, which will be available to offset future taxable income. If not used, losses with a tax effect of approximately $6,912 will expire within five years and losses with a tax effect of $376 will expire in 2037. The remaining portion of the carry forward losses arose in jurisdictions where losses do not expire.
The Company recognizes interest and penalties accrued related to unrecognized tax benefits in tax expense. During the fiscal years ended March 31, 2017, March 31, 2016 and March 31, 2015, the Company had no amounts accrued for interest and penalties. The Company does not currently anticipate that the total amount of unrecognized tax benefits will result in material changes to its financial position within the next 12 months.
The Company has evaluated its tax positions in all jurisdictions at each year end and has concluded that there are no material uncertain tax positions.
The Company files separate company income tax returns in its domestic and foreign jurisdictions. All necessary income tax filings in all jurisdictions have been completed for all years up to and including March 31, 2016 and there are no ongoing tax examinations in any jurisdiction.
No tax charge arose on any element of other comprehensive loss.