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INCOME TAXES
 6 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 7 – INCOME TAXES

 

The U.S. and non-U.S. components of loss before income taxes were as follows:

        
  

Six months ended

June 30,

 
   2026   2025 
United States  $248,549   $(5,000)
Canada   36,727    (137,740)
Income (Loss) before income taxes  $285,276   $(142,740)

 

The Company recorded income tax expense of $67,061 and $nil for the six months ended June 30, 2026 and 2025, respectively.

 

United States

 

The Company is subject to US federal corporate income tax rate of 21%.

 

At June 30, 2026, the Company had approximately $10,000 of U.S. federal net operating losses available to offset future taxable income. These net operating losses may be carried forward indefinitely and are subject to an annual limitation of 80% of taxable income.

 

In connection with the reverse acquisition completed on October 16, 2024, BSCL was determined to be the legal acquirer but the accounting acquiree under ASC 805-40, Reverse Acquisitions. For accounting purposes, the transaction is treated as a recapitalization of the accounting acquirer, whereby the net assets of the legal acquirer BSCL are stated at their historical carrying amounts, and no goodwill or intangible assets are recognized. The historical accumulated deficit of $12,360,713 of the legal acquirer was eliminated against Additional Paid-in Capital as part of this recapitalization, consistent with ASC 805-40-45-1, since the financial statements subsequent to the transaction represent a continuation of the accounting acquirer’s operations with a recapitalized capital structure.

 

The Company evaluated the potential tax benefits associated with the legal acquirer’s historical NOLs under ASC 740. Because the transaction resulted in a change of ownership under Internal Revenue Code 382 and the legal acquirer had no continuing operations, no deferred tax asset has been recognized for those NOLs. Utilization of such pre-acquisition losses, if any, would be limited and will be recognized in the period utilization becomes more likely than not.

 

Canada

 

The Company’s Canadian subsidiaries are subject to a combined federal and provincial statutory income tax rate of 26.5% for the six months ended June 30, 2026 and the year ended December 31, 2025.

 

At June 30, 2026, the Canadian subsidiaries had approximately $143,000 of net operating losses (“NOLs”) available to offset future taxable income. These NOLs may be carried forward for up to 20 years.

 

 

The components of deferred tax assets are summarized as follows:

        
  

June 30,

2026

   December 31,
2025		 
Deferred tax assets – U.S. NOLs  $2,100   $2,100 
Deferred tax assets – Canadian NOLs   37,997    – 
Gross deferred tax assets   40,097    2,100 
Less: Valuation allowance   (40,097)   (2,100)
Deferred tax assets  $–   $– 

 

The reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rate is as follows:

        
  

Six months ended

June 30,

 
   2026   2025 
U.S. federal statutory income tax rate   21.0%    21.0% 
Foreign rate differential   (2.70%)   (8.5%)
Tax on disallowed income   –%    –% 
Valuation allowance   5.21%    (12.5%)
Net operating loss applied   –%    –% 
Effective income tax rate   23.51%    0.0% 

 

A reconciliation of the income tax expense, net determined at U.S. federal statutory income tax rate to the Company’s actual income tax expense is as follows:

         
  

Six months ended

June 30,

 
   2026   2025 
Income (loss) before income tax expense  $285,276   $(142,740)
Statutory income tax rate   21.0%    21.0% 
Income tax expense (benefit) at statutory rate   59,908    (29,975)
Foreign tax differential   (7,713)   28,925 
Change in valuation allowance   14,866    1,050 
Net operating loss applied   –    – 
Income tax expenses  $67,061   $–