v3.26.3
Income Taxes
 12 Months Ended
Jul. 31, 2026
Income Taxes  
Income Taxes

Note 5. Income Taxes

 

As of July 31, 2026, the Company has deferred tax assets as a result of the net operating losses incurred from inception and depletion of royalty interests. The resulting deferred tax assets are reduced by a valuation allowance as discussed in Note 2 equal to the deferred tax asset as it is unlikely, based on current circumstances, that the Company will ever realize a tax benefit. Significant components of the Company’s deferred tax assets and as follows as of July 31:

 

 

 

2026

 

 

2025

 

 

 

$ 

 

 

 $

 

Deferred tax assets:

 

 

 

 

 

 

Depletion of royalty interests

 

 

1,047

 

 

 

-

 

Net operating loss carryforwards

 

 

2,452,785

 

 

 

2,446,660

 

Total deferred tax assets

 

 

2,453,832

 

 

 

2,446,660

 

Valuation allowance

 

 

(2,453,832 )

 

 

(2,446,660 )

 

Deferred tax assets and the corresponding valuation allowances amounted to approximately $2.45 million and $2.45 million as of July 31, 2026 and 2025, respectively. The Company did not pay any federal, state or foreign income taxes, net of refunds received, during the years ended July 31, 2026 and 2025.

 

Net Operating Losses (NOL):

 

As of July 31, 2026 the Company had federal operating loss carryforwards of approximately $11.7 million, of which approximately $8.6 million was generated in tax years beginning before January 1, 2018, and approximately $3.1 million was generated in tax years beginning after December 31, 2017. The federal loss carryforwards generated prior to January 1, 2018, began to expire in fiscal year 2024 and will continue to expire through fiscal year 2038 if not utilized. The federal losses carryforwards generated after December 31, 2017 can be carried forward indefinitely, but the utilization is limited to 80% of taxable income in any year. Utilization of the NOL carryforwards may be subject to an annual limitation under Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions due to prior or future ownership changes. Such annual limitations may result in the expiration of NOL carryforwards before utilization.

 

The income tax provision for the year ended July 31, 2026 and 2025 consists of the following:

 

 

 

2026

 

 

2025

 

Federal

 

 

 

 

 

 

Current

 

$-

 

 

$-

 

Deferred

 

 

7,172

 

 

 

3,272

 

Change in valuation allowance

 

 

(7,172)

 

 

(3,272 )

Income tax provision

 

$-

 

 

$-

 

 

Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 2, Summary of Significant Accounting Policies, the reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year ended July 31, 2026 was as follows,

 

 

 

Amount

 

 

Percent

 

U.S. federal statutory tax rate

 

 

7,172

 

 

 

21%

Changes in valuation allowance

 

 

(7,172 )

 

 

(21 )%

Effective tax rate

 

 

-

 

 

 

0%