DRIVIN G ROWTH - Dr. Reddy's

notes to financial statements
2.RELATED PARTY TRANSACTIONS
The Company earned all of its revenue, exclusive of interest income from a Research Agreement with its parent company. Payments
received from Dr. Reddy Research Foundation, an affiliate of its parent company, were $ 2,150,000 during the year ended March
31, 2002 and $ 1,150,000 during the three months ended March 31, 2001. The Company recognised $ 2,249,997 for the year
ended March 31, 2002 and $ 475,003 for the three months ended March 31, 2001, as income from the Research Agreement.
Deferred revenue of $ 575,000 and $ 674,997 represents the portion of the aforementioned payments yet to be recognised as
revenue at March 31, 2002 and 2001.
3.LEASING ARRANGEMENTS
The Company leases office space and equipment under a non-cancelable operating lease. Rent expense was $95,153 for year ended
March 31, 2002 and $22,994 for the three months ended March 31, 2001. The following is a schedule of future minimum lease
payments required under the leases at March 31, 2002:
(US $)
2003 92,602
2004 95,445
4.INCOME TAXES
Operating loss and tax credit carry forwards
The Company has a loss carry forward of $ 842,976 that may be offset against future taxable income and research and development
credits totalling $75,200 that may be offset against future federal income taxes. If not used, the carry forwards and credit will expire
in 2020.
Components – current and deferred
The provisions for income taxes consist of the following components:
(US $)
Current tax expense 65,500
Deferred expense from timing differences 4,380
Total tax benefit 69,880
Less: Tax benefit of net operating loss carry forward (69,880)
Tax provision None
Deferred tax assets and liabilities consist of
Asset – tax benefit of operating loss 368,956
Asset – research credit 75,200
Liability – timing differences (9,855)
Total tax benefit 434,301
Less: Valuation allowance (434,301)
Net deferred taxes None
5.SALARY DEFERRAL PLAN
Employees with over one year of service may join the Company sponsored 401(k) plan and elect to defer a portion of their
compensation. The Company contributed to the plan $ 10,466 for year ended March 31, 2002 and $ 2,475 for the three months
ended March 31, 2001.
6.STOCK OPTION PLAN
In 2000, the Company adopted the Reddy US Therapeutics, Inc. 2000 Equity Ownership Plan (the “Plan”) to provide for the issuance
of incentive stock options and non statutory stock options. When the Plan was established, the Company reserved 500,000 shares
for issuance. Under the Plan, stock options may be granted at a price per share of not less than the fair market value of common
stock on the date of grant. At March 31, 2002 options for 293,500 shares of the Company’s common stock were outstanding.
REDDY US THERAPEUTICS, INC. | FINANCIALS | ANNUAL REPORT 2001-2002
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