v3.26.1
Note 20 - Income Tax
 12 Months Ended
Dec. 31, 2025
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

NOTE 20: INCOME TAX 

 

 

 

December 31, 2025

 

 

December 31, 2024

 

Domestic

 

 

(18,824

)

 

 

(9,437

)

Foreign

 

 

(1,053

)

 

 

(1,023

)

Total

 

 

(19,877

)

 

 

(10,460

)

 

 

 

December 31, 2025

 

 

December 31, 2024

 

Domestic

 

 

-

 

 

 

-

 

State

 

 

5

 

 

 

(2

)

Foreign

 

 

-

 

 

 

-

 

Total

 

 

5

 

 

 

(2

)

 

The total provision for income taxes differs from the amount which would be computed by applying the U.S. income tax rate to loss before income taxes. The reasons for these differences are as follows:

 

 

 

December 31

 

 

 

2025

 

 

2024

 

Federal statutory income tax recovery

 

$

(4,174

)

 

 

21

%

 

$

(2,197

)

 

 

21

%

State and local income tax, net of federal income tax effect (a)

 

 

4

 

 

 

0

%

 

 

2

 

 

 

0

%

Foreign Tax Effects

 

 

 

​

 

 

 

​

 

 

 

​

 

 

 

​

Canada

 

 

 

​

 

 

 

​

 

 

 

​

 

 

 

​

Statutory tax rate difference between Canada and United States

 

 

-

 

 

 

0

%

 

 

-

 

 

 

0

%

Change in valuation allowance and others

 

 

1

 

 

 

0

%

 

 

4

 

 

 

0

%

Israel

 

 

 

​

 

 

 

​

 

 

 

​

 

 

 

​

Statutory tax rate difference between Israel and United States

 

 

(21

)

 

 

0

%

 

 

(20

)

 

 

0

%

Change in valuation allowance

 

 

241

 

 

 

-1

%

 

 

232

 

 

 

-2

%

Non-deductible legal costs related to acquisition

 

 

-

 

 

 

0

%

 

 

260

 

 

 

-2

%

Non-deductible loss on the repayment of notes

 

 

2,257

 

 

 

-11

%

 

 

-

 

 

 

0

%

Other Non-deductible permanent differences

 

 

64

 

 

 

0

%

 

 

76

 

 

 

-1

%

Change in valuation allowance

 

 

1,633

 

 

 

-8

%

 

 

1,641

 

 

 

-16

%

Income tax expense (recovery)

 

$

5

 

 

 

0

%

 

$

(2

)

 

 

0

%

 

(a) State tax in California made up the majority (greater than 50 percent) of the tax effect in this category.

 

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities and certain carry-forward balances.

 

The primary components of the deferred tax assets and liabilities are as follows, for the years indicated below:

 

 

 

December

 

 

 

2025

 

 

2024

 

 

 

 

 

​

 

 

 

​

Deferred tax assets

 

 

 

​

 

 

 

​

Non-capital loss carry-forwards from Canada

 

 

5

 

 

 

4

 

Non-capital federal loss carry-forwards from U.S.

 

 

6,174

 

 

 

4,149

 

Non-capital state loss carry-forwards from U.S.

 

 

598

 

 

 

-

 

Non-capital loss carry-forwards from Israel

 

 

18,245

 

 

 

15,572

 

Stock-based compensation

 

 

780

 

 

 

405

 

Research and development expenses

 

 

202

 

 

 

198

 

Intangible asset

 

 

-

 

 

 

221

 

Reserves and others

 

 

188

 

 

 

152

 

 

 

 

26,191

 

 

 

20,701

 

Deferred tax liabilities

 

 

 

​

 

 

 

​

Intangible asset

 

 

(147

)

 

 

-

 

Property, plant and equipment

 

 

(13

)

 

 

(18

)

 

 

 

(161

)

 

 

(18

)

 

 

 

 

​

 

 

 

​

Valuation allowances for deferred tax assets

 

 

(26,031

)

 

 

(20,683

)

Net deferred tax assets

 

 

-

 

 

 

-

 

 

The net deferred tax assets have been offset by a valuation allowance because it is not more likely than not the Company will realize the benefit of these deferred tax assets. The Company does not have any unrecognized tax benefits as of  December 31, 2025 and 2024.

 

At  December 31, 2025, the Company's Canadian, US, and Israeli non-capital income tax losses, the benefit of which has not been recognized on the consolidated financial statements, expire as follows:

 

​

​

Canada

​

​

US (Federal)

​

​

US (State)

​

​

Israel

​

2025

​

$

-

​

​

$

218

​

​

$

-

​

​

$

-

​

2026

​

​

-

​

​

​

218

​

​

​

-

​

​

​

-

​

2027

​

​

-

​

​

​

218

​

​

​

-

​

​

​

-

​

2028

​

​

-

​

​

​

541

​

​

​

-

​

​

​

-

​

2029

​

​

-

​

​

​

218

​

​

​

-

​

​

​

-

​

2030

​

​

-

​

​

​

218

​

​

​

-

​

​

​

-

​

2031

​

​

-

​

​

​

218

​

​

​

11

​

​

​

-

​

2032

​

​

-

​

​

​

218

​

​

​

30

​

​

​

-

​

2033

​

​

-

​

​

​

218

​

​

​

28

​

​

​

-

​

2034

​

​

-

​

​

​

218

​

​

​

135

​

​

​

-

​

2035

​

​

-

​

​

​

218

​

​

​

519

​

​

​

-

​

2036

​

​

-

​

​

​

874

​

​

​

386

​

​

​

-

​

2037

​

​

-

​

​

​

218

​

​

​

81

​

​

​

-

​

2038

​

​

-

​

​

​

-

​

​

​

85

​

​

​

-

​

2039

​

​

-

​

​

​

-

​

​

​

132

​

​

​

-

​

2040

​

​

-

​

​

​

-

​

​

​

356

​

​

​

-

​

2041

​

​

-

​

​

​

-

​

​

​

19

​

​

​

-

​

2042

​

​

2

​

​

​

-

​

​

​

108

​

​

​

-

​

2043

​

​

-

​

​

​

-

​

​

​

1,277

​

​

​

-

​

2044

​

​

16

​

​

​

-

​

​

​

8

​

​

​

-

​

2045

​

​

5

​

​

​

-

​

​

​

4,213

​

​

​

-

​

Indefinite

​

​

-

​

​

​

25,588

​

​

​

-

​

​

​

79,324

​

​

​

$

23

​

​

$

29,399

​

​

$

7,388

​

​

$

79,324

​

 

The above losses in the U.S. are subject to limitation under IRC Section 382 as a result of the ownership changes on August 12, 2024, and May 5, 2025. A preliminary estimate, based on the Company’s valuation as of the dates of the ownership changes and utilizing the applicable long-term tax-exempt rate, indicates an approximate annual Section 382 limitation of $2,086. It is important to note that this limitation may be subject to certain favorable adjustments in the calculation of the annual limitation.

 

Included within the above presentation, the Company reduced its pre-change net operating loss carryforwards of $5,411 related to subsidiary Elminda 2022 Inc. Due to the ownership change and the determination that Elminda 2022 Inc. had no realizable value, these carryforwards are deemed to be fully limited under Section 382.

 

At  December 31, 2025 and 2024, the Company had a cumulative carry-forward pool of Israeli research and development expenditures in the amount of $880 and $861, respectively, which will be amortized within the next two years.

 

The 2021 through 2024 U.S. state tax returns are subject to examination by state tax authorities.

 

In Canada, the taxation years of 2021-2024 remain open to assessment by the Canadian tax authority, which the tax authority can reassess within four years of the date it sent the original notice of assessment for the tax year given the Company is not a Canadian-controlled private corporation.

 

In Israel, the taxation years of 2021-2024 remain open to assessment by the Israeli tax authority, which the tax authority can reassess within four years from the end of the tax year in which the tax return is filed.