v3.26.1
NOTE 12 – INCOME TAXES
 9 Months Ended
May 31, 2026
Income Tax Disclosure [Abstract]  
NOTE 12 – INCOME TAXES

NOTE 12 – INCOME TAXES

 

The Company and its fully owned subsidiaries, AB Cinemas NY, Inc and AI+ Hubs Corp, were incorporated in the United States and are subject to a statutory income tax rate at 21%. The Company’s fully owned subsidiary, App Board Limited, was registered in Hong Kong and is subject to a statutory income tax rate at 16.5%.

 

As of May 31, 2026 and August 31, 2025, the components of net deferred tax assets, including a valuation allowance, were as follows:

 

  

May 31,

2026 

  August 31, 2025
Deferred tax asset attributable to:          
Net operating loss carry over  $1,314,655   $1,580,516 
Less: valuation allowance   (1,314,655)   (1,580,516)
Net deferred tax asset  $—     $—   

 

For the nine months ended May 31, 2026 and 2025, the Company and its subsidiaries generated net loss and net income respectively. However, despite the current profitability, management believes that the Company’s earnings are not yet stable or sustainable. The Company also continues to experience negative working capital and has an accumulated deficit.

 

In assessing the realizability of deferred tax assets, management evaluates whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which the related temporary differences become deductible. In making this assessment, management considers the scheduled reversal of deferred tax items, projected future taxable income, and feasible tax planning strategies.

 

As a result, management determined that it is more likely than not that the Company’s deferred tax assets will not be realized, after considering the potential utilization of existing net operating loss (“NOL”) carryforwards. As of May 31, 2026 and August 31, 2025, the valuation allowance for deferred tax assets was $1,314,655 and $1,580,516, respectively.

 

Reconciliation between the statutory rate and the effective tax rate is as follows for the nine months ended May 31, 2026 and 2025:

                 
   Nine months ended
   May 31,  May 31,
   2026  2025
Federal statutory tax rate   21%   21%
Effect of permanent difference   (14)%   —  %
Change in valuation allowance   (7)%   (21)%
Effective tax rate   0%   0%

 

During the nine months ended May 31, 2026, the Company and its subsidiaries generated net losses. As a result, the Company and its subsidiaries did not incur any income tax for the nine months ended May 31, 2026.

 

During the nine months ended May 31, 2025, the Company and its subsidiaries generated net income. However, due to the fact that the Company had net operating loss carried forward, the Company and its subsidiaries did not incur any income tax for the nine months ended May 31, 2025.

  

 

AI ERA CORP. (FORMERLY KNOWN AS AB INTERNATIONAL GROUP CORP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)