Annual report [Section 13 and 15(d), not S-K Item 405]

INCOME TAXES

v3.25.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES

18. INCOME TAXES

 

For the year ended December 31, 2024 and 2023, loss before income tax provision consisted of the following:

 

    December 31,
2024		     December 31,
2023		  
             
Domestic operations – Canada   $ (15,395,415 )   $ (10,981,917 )
Foreign operations - United States     (879,400 )     (751,293 )
Total loss before taxes   $ (16,274,815 )   $ (11,733,210 )

 

Income tax expense (benefit) consists of the following for the years ended December 31, 2024 and 2023:

 

   

December 31,

2024

     December 31,
2023		  
             
Loss before taxes   $ (16,274,815 )   $ (11,733,210 )
Statutory tax rate     27.00 %     27.00 %
Income taxes at the statutory rate   $ (4,394,200 )   $ (3,167,967 )
Change in fair value of derivative liabilities     (377,536 )     (2,525,761 )
Non-deductible accretion interest     671,064       1,665,506  
Debt conversion and extinguishment losses     1,195,929       509,945  
Stock-based compensation     109,803       314,023  
Share issue costs     (126,529 )     (167,075 )
Foreign currency translation     1,159,454       (185,096 )
Other     (80,453 )     1,893  
Total   $ (1,842,468 )   $ (3,554,532 )
                 
Change in valuation allowance   $ 1,842,468     $ 3,554,532  
Total income tax expense (benefit)   $ -     $ -  

 

The Company is subject to Canadian federal and provincial tax for the estimated assessable profit for the years ended December 31, 2024 and 2023 at a rate of 27%.

 

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,
2024		     December 31,
2023		  
Deferred tax assets:                
Unused net operating losses carry forward - Canada and United States   $ 11,941,424     $ 10,964,564  
Share issue costs     261,984       285,654  
Tangible capital assets     (51,391

)

     2,692  
Intangible capital assets     943,361       -  
Total deferred tax assets     13,095,378       11,252,910  
Valuation allowance     (13,095,378 )     (11,252,910 )
Net deferred tax assets   $ -     $ -  

 

The Company has non-capital losses of $38.7 million as of December 31, 2024 and $37.4 million as of December 31, 2023, which can be used to offset future taxable income in Canada, and are due to expire in the following years:

 

         
2038   $ 1,855,758  
2039     4,203,902  
2040     2,166,985  
2041     5,892,732  
2042     10,250,711  
Thereafter     14,375,687  
    $ 38,745,775  

 

For foreign operations in United States, aggregate net operating losses are $3.8 million as of December 31, 2024 and $2.2 million as of December 31, 2023 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. No analysis has been done as of December 31, 2024 since the Company continued to generate losses and no net operating losses have been utilized

 

The Company files income tax returns in Canada and the United States and is subject to examination in these jurisdictions for all years since the Company’s inception in 2017. As at December 31, 2024, no tax authority audits are currently underway.

 

The Company currently has no uncertain tax position and is therefore not reflecting any adjustments.