v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Taxes [Abstract]  
Income taxes
22.Income taxes

 

For financial reporting purposes, income before taxes includes the following components:

 

Year ended December 31, 2025  2025   2024 
United States  $(11,364,445)  $(13,500,171)
Foreign (Canada)   (16,991,778)   1,108,873 
Total  $(28,356,223)  $(12,391,298)

 

Income tax expense included in the accompanying Consolidated Statements of Comprehensive Income for the years presented below:

 

Year ended December 31, 2025  2025   2024 
Current:          
Federal  $
   -
   $
    -
 
Foreign   
-
    
-
 
State and local  $
-
    
-
 
Total  $-   $- 
Deferred:          
Federal  $
-
   $
-
 
Foreign   
-
    
-
 
State and local   
-
    
-
 
Total  $
-
   $
-
 
Total  $
-
   $
-
 

 

The Corporation adopted ASC 2023-09 during the year ended December 31, 2025 retrospectively. The reconciliation of the federal statutory rate on the income before income taxes to the effective income tax rate after the adoption of ASU 2023-09 on a retrospective basis is as follows:

 

   Year Ended
December 31, 2025		   Year Ended
December 31, 2024		 
   Amount   Percent   Amount   Percent 
Canadian federal statutory income tax rate  $(4,301,694)   15.00%  $(1,858,695)   15.00%
Domestic Federal                    
Non-taxable and non-deductible items - Canada                    
Statutory income tax differential   1,933,606    (6.70)%   (740,467)   6.00%
Valuation allowance - Federal   (1,933,606)   6.70%   740,467    (6.00)%
Foreign tax effects United States                    
Non-deductible and other expenses   4,374    0.00%   202,587    (1.60)%
Meals and entertainment   8,181    0.00%   4,670    0.00%
Warrants   653,103    (2.30)%   151,941    1.20%
Valuation allowance - United States   5,407,278    (18.90)%   2,893,001    (23.30)%
Statutory income tax differential   (1,720,677)   6.00%   (743,478)   6.00%
Other   (50,565)   0.20%   (21,489)   0.20%
Foreign state and local income taxes, net of federal effect   
-
    0.00%   (628,537)   5.10%
Total  $
-
    0.00%  $
-
    0.00%

Significant components of the Corporation’s deferred tax assets and liabilities as of December 31 were as follows:

 

    As at
December 31,		     As at
December 31,		  
    2025     2024  
Deferred tax assets:            
Share issuance costs - Canada   $ 1,017,496     $ 320,469  
Net operating loss carryforwards - Canada     3,433,079       940,009  
Net operating loss carryforwards - United States     12,334,695       8,261,043  
Stock based compensation     1,708,123       593,434  
Digital currency loan - unrealized gain / (loss)     339,317       293,738  
Revaluation of digital currency     1,093,218       -  
Depreciation     1,801,448       1,976,017  
Amortization     257,169       299,735  
Lease liabilities     -       33,733  
Capital loss carryover     2,238,369       2,764,887  
Other     72,509       72,509  
Total deferred tax assets     24,295,423       15,555,574  
Less: Valuation allowance for deferred tax assets     (22,348,671 )     (12,420,466 )
Net deferred tax assets   $ 1,946,752     $ 3,135,108  
Deferred tax liabilities:                
Amortization   $ (246,440 )   $ (280,820 )
Right-of-use assets     (521,071 )     (542,691 )
Revaluation of digital currency     -       (239,085 )
Other     (1,179,241 )     (2,072,512 )
Total deferred tax assets   $ (1,946,752 )   $ (3,135,108 )
Net deferred tax assets (liabilities)   $ -     $ -  

 

 

The Corporation is treated as a United States corporation for United States federal income tax purposes under section 7874 of the U.S. Tax Code and is subject to United States federal income tax. However, for Canadian tax purposes, the Corporation is expected, regardless of any application of section 7874 of the U.S. Tax Code, to be treated as a Canadian resident company (as defined in the Income Tax Act (Canada) (the “ITA”) for Canadian income tax purposes. As a result, the Corporation will be subject to taxation both in Canada and the United States.

 

The Corporation has a valuation allowance on all of its deferred tax assets at December 31, 2025 and 2024, which based on the judgement of management is 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 differences become deductible. Based on the Corporation’s history of losses and projections for future taxable income, management believes that it is not more-likely than-not that the Corporation will realize the benefits of these deductible temporary differences.

 

The Corporation has gross Canadian operating tax loss carryforwards of $15,664,342. To the extent that the operating tax loss carryforwards are not used, they begin to expire in 2041. As of December 31, 2025, the Corporation has $45,820,361 of federal net operating loss carryforwards available, and has state net operating losses of approximately $48,043,510 which began to expire in 2041.

 

The Corporation has reviewed the tax positions taken, or to be taken, in its tax returns for all tax years currently open to examination by a taxing authority. The total amount of unrecognized tax benefits, that is the aggregate tax effect of differences between tax return positions and the benefits recognized in the Corporation’s financial statements, as of December 31, 2025 and 2024 of $nil and $nil, respectively.

The Corporation recognizes accrued interest and penalties, if any, related to unrecognized tax benefits as a component of income tax expense. During the years ended December 31, 2025 and 2024, the Corporation did not recognize any net interest expense.

 

The Corporation files income tax returns with Canada and its provinces and territories and is generally subject to routine examinations by the Canada Revenue Agency (“CRA”). 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 returns. The Corporation also files income tax returns in the United States and various state tax jurisdictions. These tax returns are generally open to examination by the relevant tax authorities for three to four years from the date they are filed. The tax filings relating to the Corporation’s U.S. federal and state taxes are currently open to examination for tax years 2022 through 2024.

 

There are no other audits or examinations in process at this time.

 

A summary of income taxes paid, net of refunds received, is as follows:

 

Year ended December 31, 2025  2025   2024 
Canadian  $
      -
   $
      -
 
US Federal, state and local          
Alabama   
-
    
-
 
New York   
-
    
-
 
Federal   
-
    
-
 
Foreign   
-
    
-
 
Total  $
-
   $
-