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

Note 17 - Income Taxes

v3.26.1
Note 17 - Income Taxes
 12 Months Ended
Dec. 31, 2025
Notes To Financial Statements [Abstract]  
Income taxes
17.
Income taxes
(a)
Income taxes

For the years ended December 31, 2025 and 2024, the loss before income taxes is as follows:

 

December 31,
2025

 

 

December 31,
2024

 

Loss attributed to U.S. foreign operations

 

$

(20,898

)

 

$

(21,564

)

Loss attributed to Canadian operations

 

 

(4,570

)

 

 

(3,866

)

Loss before income taxes

 

$

(25,468

)

 

$

(25,430

)

 

(b)
Tax rate reconciliation

Major items causing the Company’s income tax rate to differ from the statutory rate of approximately 15.0% (December 31, 2024 – 15.0%) are as follows:

 

Year ended December 31, 2025

 

 

Year ended December 31, 2024

 

Net loss

 

$

(25,468

)

 

$

(25,430

)

Statutory Canadian corporate tax rate

 

 

15.0

%

 

 

15.0

%

Computed expected tax recovery

 

$

(3,820

)

 

$

(3,815

)

Foreign tax effects (United States)

 

 

 

 

 

 

    Statutory tax rate difference between United States and Canada

 

 

(1,308

)

 

 

674

 

    Changes in valuation allowances

 

 

1,317

 

 

 

(673

)

    Other

 

 

(9

)

 

 

(1

)

Changes in valuation allowances

 

 

3,744

 

 

 

4,116

 

Non-taxable or non-deductible items

 

 

103

 

 

 

(392

)

Other

 

 

(27

)

 

 

91

 

 

$

—

 

 

$

—

 

 

(c)
Significant components of deferred taxes

The tax effects of temporary differences that give rise to significant portions of the unrecognized deferred tax assets are presented below:

 

 

December 31,
2025

 

 

December 31,
2024

 

Net operating losses carried forward

 

$

87,938

 

 

$

79,951

 

Research and development expenditures

 

 

5,023

 

 

 

5,016

 

Property, equipment, and other intangible assets

 

 

7,265

 

 

 

7,265

 

Research and development tax credits

 

 

4,822

 

 

 

4,864

 

Financing costs

 

 

718

 

 

 

909

 

Restricted interest and financing expenses

 

 

202

 

 

 

—

 

Right-of-use assets

 

 

5

 

 

 

13

 

Total deferred tax assets

 

 

105,973

 

 

 

98,018

 

Valuation allowance

 

 

(105,973

)

 

 

(98,018

)

Net deferred tax asset

 

$

—

 

 

$

—

 

The valuation allowance at December 31, 2025 was primarily related to net operating loss carryforwards that, in the judgment of management, are not more likely than not to be realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that all or some portion of the deferred assets will

not be realized. This ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those deductible temporary difference become deductible. Based on the history of losses and projections for future taxable income, management believes that it is not more likely than not that the Company will realize the benefits of these deductible temporary differences (e.g., deferred tax assets).

The Company has certain deductible Canadian research and development expenditures that have not been deducted for tax purposes, totaling $19.0 million, that can be carried forward indefinitely. The Company also has Canadian non‑refundable federal and provincial investment tax credits of approximately $2.3 million, which are available to reduce future federal taxes payable and begin to expire in 2026, as well as non‑refundable U.S. research and development tax credits of approximately $3.1 million, which are available to reduce future U.S. taxes payable and begin to expire in 2038.

In addition, the Company has Canadian non-capital loss carryforwards of $317.9 million. To the extent that the non-capital loss carryforwards are not used, they begin to expire in 2026. The Company also has a U.S. non-capital loss carryforward of $1.2 million. To the extent that the non-capital loss carryforwards are not used, they begin to expire in 2034.

The Company files income tax returns with Canada and its provinces and territories. Generally, the Company is subject to routine examinations by the Canada Revenue Agency. Income tax returns filed with various provincial jurisdictions are generally open to examination for periods of four to five years subsequent to the filing of the respective return.

The Company also files income tax returns for its U.S. subsidiary with the U.S. federal and state tax jurisdictions. Generally, the Company is subject to routine examination by taxing authorities in the U.S. jurisdictions. There are presently no examination of the Company's U.S. federal and U.S. state returns. The Company believes that its tax positions comply with the applicable tax law.