v3.26.1
Income taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income taxes

Note 14 – Income taxes

 

United States

 

KNOREX US was incorporated in the State of Delaware and holds its operation in the state of California. KNOREX US is subject to a federal income tax rate of 21% and California income tax rate of 8.84%.

 

Singapore

 

KNOREX SG is incorporated in Singapore and is subject to Singapore income tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Singapore tax laws. The applicable tax rate is 17% in Singapore, with 75% of the first US$7,415 (S$10,000) taxable income and 50% of the next US$140,887 (S$190,000) taxable income are exempted from income tax.

 

Vietnam

 

The Company’s subsidiary operating in Vietnam is subject to the Vietnam Income Tax at a standard income tax rate of 20%.

 

Other Countries

 

The Company’s other subsidiaries with operations in other countries (Malaysia, Thailand, Australia, India, and China) are insignificant to its operations for the year ended December 31, 2025, 2024 and 2023.

 

The United States and foreign components of loss before income taxes were comprised of the following:

 

  

For the Year Ended

December 31, 2025

  

For the Year Ended

December 31, 2024

  

For the Year Ended

December 31, 2023

 
   US$   US$   US$ 
U.S. loss  $(2,783,583)  $(1,741,678)  $(3,843,380)
Foreign loss   (8,657,975)   (4,083,710)   (4,088,153)
Total loss before income taxes  $(11,441,558)  $(5,825,388)  $(7,931,533)

 

The provision for income taxes consisted of the following:

 

  

For the Year Ended

December 31, 2025

  

For the Year Ended

December 31, 2024

  

For the Year Ended

December 31, 2023

 
   US$   US$   US$ 
Current               
Federal  $-   $-   $- 
State   22,838    16,671    6,775 
Foreign   77,664    41,552    26,464 
Deferred               
Federal   -    -    - 
State   -    -    - 
Foreign   3,114           
Provision for income taxes  $103,616   $58,223   $33,239 

 

 

The following tables reconcile U.S. statutory rates to the Company’s effective tax rate:

 

   $   % 
  

For the Year Ended

December 31, 2025

 
   $   % 
Benefit for income taxes at U.S. federal statutory rate  $2,400,896    21.0%
State and local income taxes, net of federal benefit   800,909    7.0 
Tax rate differential outside of U.S.   (1,152,160)   (10.1)
Change in valuation allowance   (1,962,095)   (17.2)
Tax effect of capitalized software development costs deduction   (134,955)   (1.1)
Tax effect of non-deductible expenditure   (92,381)   (0.8)
Tax effect of non-taxable income   36,170    0.3
Total tax provision and effective tax rate  $(103,616)   (0.9)%

 

    $    % 
  

For the Year Ended

December 31, 2024

 
   $   % 
Provision for income taxes at U.S. federal statutory rate  $1,222,399    21.0%
State and local income taxes, net of federal benefit   407,777    7.0 
Tax rate differential outside of U.S.   (506,156)   (8.6)
Change in valuation allowance   (993,753)   (17.1)
Tax effect of capitalized software development costs deduction   (126,649)   (2.2)
Tax effect of deferred offering costs deduction   (88,049)   (1.5)
Tax effect of non- deductible expenditure   (28,755)   (0.5)
Tax effect of non- taxable income   54,963    0.9 
Total tax provision and effective tax rate  $(58,223)   (1.0)%

 

    %    $ 
  

For the Year Ended

December 31, 2023

 
   $   % 
U.S. federal statutory rate  $1,665,622    21.0%
State and local income taxes, net of federal benefit   555,207    7.0 
Tax rate differential outside of U.S.   (392,061)   (4.9)
Change in valuation allowance   (1,627,630)   (20.5)
Tax effect of capitalized software development costs deduction   (16,260)   (0.2)
Tax effect of deferred offering costs deduction   (79,157)   (1.0)
Tax effect of non- deductible expenditure   (140,943)   (1.8)
Tax effect of non- taxable income   1,983    0.0 
Total tax provision and effective tax rate  $(33,239)   (0.4)%

 

 

The following table sets forth the significant components of the aggregate deferred tax assets of the Company:

 

  

As of

December 31, 2025

  

As of

December 31, 2024

 
   US$   US$ 
Deferred Tax Assets          
Net operating loss carryforwards – U.S.  $6,821,392   $5,575,673 
Net operating loss carryforwards – Singapore   4,605,688    3,886,272 
Net operating loss carryforwards – Other counties     714,248       718,791  
Less: valuation allowance   (12,141,328)   (10,180,736)
Deferred tax assets, net  $-   $- 

 

As of December 31, 2025 and 2024, the Company had net operating losses carry forward of approximately US$24.4 million and US$19.9 million, respectively, from the Company’s U.S. subsidiaries. The net operating losses can be carried forward indefinitely. Due to the Company’s U.S. subsidiaries have been operating at losses, the Company is uncertain when these net operating losses can be utilized. As a result, the Company provided a 100% allowance on deferred tax assets on net operating losses of approximately US$6.5 million and US$5.6 million related to U.S. subsidiary as of December 31, 2025 and 2024, respectively.

 

As of December 31, 2025 and 2024, the Company and its Singapore subsidiary had net operating losses carry forward of approximately US$27.0 million and US$23.9 million, respectively, from the Company and its Singapore subsidiary. The net operating losses from the Company and its Singapore subsidiary can be carried forward indefinitely. Due to the Company and its Singapore subsidiary have been operating at losses, the Company is uncertain when these net operating losses can be utilized. As a result, the Company provided a 100% allowance on deferred tax assets on net operating losses of approximately US$4.2 million and US$3.9 million related to the Company and its Singapore subsidiary as of December 31, 2025 and 2024, respectively.

 

The following is a supplemental schedule of cash paid for income taxes:

 

   2025   2024   2023 
   Year Ended December 31, 
   2025   2024   2023 
Cash paid during the period for income taxes, net of refunds:            
Federal  $—   $—   $— 
State and local   27,341    13,110    7,022 
Foreign   60,452    16,415    26,217 
Total cash paid during the period for income taxes  $87,793   $29,525   $33,239 

 

Uncertain tax positions

 

The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of December 31, 2025 and 2024, the Company did not have any significant unrecognized uncertain tax positions. The Company did not incur interest and penalties tax for the years ended December 31, 2025, 2024 and 2023.