v3.25.2
Income taxes
 12 Months Ended
Mar. 31, 2025
Income taxes [Abstract]  
Income taxes
11. Income taxes
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due. Deferred taxes relate to differences between the basis of assets and liabilities for financial and income tax reporting which will be either taxable or deductible when the assets or liabilities are recovered or settled.
 
The provision for income taxes consisted of the following:
 
         
      March 31, 2025 

      March 31, 2024

 
     $     $ 
Current Provision
   
       
Federal
   —     2 
State
   3     — 
Total Current Provision
   3     2 
             
Deferred Provision
           
Federal
   (2,392)     (1,834) 
State
   (810)     — 
Total Deferred Provision
   (3,202)     (1,834) 
             
Total Provision for Income Taxes
   (3,199)     (1,832) 
 
 
 
For the years ended March 31, 2025 and 2024, the income/(loss) before income taxes was $ (12,767) and ($14,685), respectively. The Company had an effective tax rate of 25.06% and 12.47% for the years ended March 31, 2025 and 2024, respectively.
 
The reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the years ended March 31, 2025 and 2024 were as follows:          
 
 
 
                                 
  For the year ended
      March 31, 2025 

        March 31, 2025

        March 31, 2024         March 31, 2024    
     $       
       $           
U.S. statutory rate
   (2,681)       21.00%      (3,084)       21.00%  
State taxes, net of federal
   (770)       6.03%      (341)       2.32%  
Difference in foreign tax rates
   (105)       0.82%      (543)       3.69%  
Return to provision
   (1)       0.00%      —       0.00%  
Change in valuation allowance
   2,347       (18.39)%      1,635       (11.13)%  
Change in tax rates
   —       0.00%      (486)       3.31%  
Non-deductible stock-based compensation
   —       0.00%      242       (1.65)%  
Non-deductible transaction costs
   —       0.00%      723       (4.92)%  
Tax credits
   (1,583)       12.40%      —       0.00%  
Change in fair value of warrant liabilities
   (876)       6.86%      —       0.00%  
Other permanent differences
   468       (3.67)%      23       (0.16)%  
Total tax (benefit) expense
   (3,199)       25.06%      (1,832)       12.47%  
The rate reconciliation was previously presented using the Canadian statutory tax rate. However, following the Company's redomiciliation from Canada to the U.S. during the year, the reconciliation now reflects the U.S. statutory tax rate. For consistency and comparison, the rate reconciliation for the year ended March 31, 2024, has been recalculated based on the U.S. statutory tax rate.
 
 
The table below presents the effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities as of March 31, 2025 and 2024:
 
 
 
 
 
          
      March 31, 2025       March 31, 2024    
     $     $   
Deferred income tax assets
             
Tax losses carried forward
   43,049     40,659   
Research and development expenses
   10,928     8,522   
Property, plant and equipment
   —     523   
Intangible assets
   206     328   
Financing expenses  
   —     169   
Net federal investment tax credits
   2,882     2,882   
Other accruals and other
   131     56   
Orphan drug credit  
   1,583     —   
Total deferred income tax assets
   58,779     53,139   
Valuation allowance
   (49,530)     (47,284)   
Total deferred income tax assets, net of valuation allowance
   9,249     5,855   
               
Deferred income tax liabilities
             
Intangible assets
   (11,561)     (11,369)   
Total deferred tax liabilities
   (11,561)     (11,369)   
               
Net deferred tax liabilities
   (2,312)     (5,514)   
 
The Company has U.S. Federal and State net operating loss carryforwards (“NOLs”) of approximately $18,621 and $18,621 and Canadian Federal and Quebec NOLs of $143,346 and $141,851, respectively, as of March 31, 2025. The Company’s U.S. Federal NOLs, generated after December 31, 2017, are available for indefinite carryforward; however, their utilization is limited to 80% of taxable income. State NOLs are subject to a 20-year carryforward period, with expirations beginning in 2038. The Company also has orphan drug tax credit totaling $1,583, which may be carried forward for 20 years and are set to begin expiring in 2045. Canadian and Quebec NOLs are scheduled to begin expiring in 2028, while scientific research and experimental development expenditures investment tax credit totaling $3,922 are set to begin expiring in 2029. Additionally, the Company has research and development expenses of $25,708 in Canada and $27,887 in Quebec, both of which are available for indefinite carryforward.
 
The utilization of the Company’s NOLs and research tax credit carryovers could be subject to annual limitations under Section 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), and similar state tax provisions, due to ownership change limitations that may have occurred previously or that could occur in the future. These ownership changes limit the amount of NOLs and other deferred tax assets that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382 and 383 of the Code, results from transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percent points over a three-year period. The Company has not completed an analysis of an ownership change under Section 382 of the Code. To the extent that a study is completed and an ownership change is deemed to occur, the Company’s NOLs and tax credits could be limited.
 
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred income tax assets will not be realized. The ultimate realization of deferred income 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 income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on consideration of these items, management has determined that enough uncertainty exists relative to the realization of the deferred income tax asset balances to warrant the application of a partial valuation allowance as of March 31, 2025 and March 31, 2024.
 
 
 
 
 
 
 
 
 
 
As a result of changes made by the Tax Cuts and Jobs Act of 2017, that became effective as of January 1, 2022, the Company is required to capitalize for tax purposes certain research and development expenses, and amortize domestic expenses over a 5-year period and foreign expenses over a 15-year period, resulting in a deferred tax asset for the capitalized amounts.
 
In accordance with ASC 740, Income Taxes, specifically related to uncertain tax positions, a company is required to use a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company believes its income tax filing positions and deductions will be sustained upon examination, and accordingly, no reserves or related accruals for interest and penalties have been recorded as of March 31, 2025.
 
 
 
 
 
 
 
 
 
 
The Company is subject to taxation in the United States at both the federal level and within the state jurisdictions of New Jersey, Pennsylvania, and California. The Company is not currently under examination by any tax authority. The statute of limitations remains open for each tax year to the extent of the net operating losses generated in that year.
 
Government assistance
 
Government assistance is comprised of research and development investment tax credits receivable from the Quebec provincial government which relate to qualifiable research and development expenditures under the applicable tax laws. The amounts recorded as receivables are subject to a government tax audit and the final amounts received may differ from those recorded. For the years ended March 31, 2025 and 2024, the Company recorded ($0) and ($55), respectively, as a reduction of research and development expenses in the consolidated statements of operations and comprehensive loss.
 
   
March 31,
2025
   
March 31,
2024
 
   $   $ 
Investment tax credit
  —   356