INCOME TAXES

12 Months Ended

Dec. 31, 2025

Income Tax Disclosure [Abstract]

INCOME TAXES

15. INCOME TAXES

Reconciliation of income taxes

The following reconciles income taxes calculated at the Canadian statutory rate with the actual income tax expense. The Canadian statutory rate includes federal and provincial income taxes. This rate was used because Canada is the domicile of the parent entity of the Company.

	For the Year Ended December 31,
	2025			2024			2023
Net loss before tax		(13,941	)		15,218			(14,252	)
Canadian statutory rate		15.0	%		15.0	%		15.0	%
Expected income tax		(2,091	)		2,283			(2,138	)
Effect on taxes resulting from:
Provincial and state income taxes		(957	)		1,024			(1,368	)
Non-deductible expenses		445			176			189
Non-deductible stock-based compensation		698			-			-
Tax rate impacts		1,001			618			(243	)
Adjustments related to prior year tax filings		364			156			(332	)
Valuation allowance		1,047			(3,809	)		4,224
Income tax expense		507			448			332
Current tax expense		507			448			332
Deferred tax recovery		-			-			-
Income tax expense		507			448			332

The provision for income taxes is comprised of federal, state, provincial and foreign taxes based on pre-tax income. In the United States, the CARES Act of 2020 allows, among other provisions, for the recovery of taxes paid over the preceding five years from current year losses.

The Company’s U.S. subsidiary’s result was taxable income for the year ended December 31, 2025. The Company utilized prior year operating losses against this income; however, U.S. tax law does not allow for the full offset of losses against current year taxable income to reduce tax payable to zero. This resulted in current tax payable of $0.5 million in 2025 (2024 - $0.4 million).

Deferred tax assets and liabilities

Significant components of the Company’s deferred tax assets and liabilities as at December 31, 2025 and 2024 were as follows:

	As at December 31, 2025
	Assets		Liabilities			Net
Operating losses		29,262		-			29,262
Research and development expenditures		331		-			331
Property and equipment		-		(1,205	)		(1,205	)
Capitalized software and other assets		-		(1,003	)		(1,003	)
Valuation allowance		-		(30,879	)		(30,879	)
Other		3,494		-			3,494
Net deferred taxes		33,087		(33,087	)		-

	As at December 31, 2024
	Assets		Liabilities			Net
Operating losses		29,134		-			29,134
Research and development expenditures		354		-			354
Property and equipment		-		(2,576	)		(2,576	)
Capitalized software and other assets		-		(1,187	)		(1,187	)
Valuation allowance		-		(30,049	)		(30,049	)
Other		4,324		-			4,324
Net deferred taxes		33,812		(33,812	)		-

Summary of temporary difference movements during the year:

	Balance			Recognized			Foreign			Balance
	January 1, 2025			in Income			Exchange			December 31, 2025
Operating losses		29,134			267			(139	)		29,262
Research and development		354			(21	)		(2	)		331
Property and equipment		(2,576	)		1,402			(31	)		(1,205	)
Capitalized software and other assets		(1,187	)		173			11			(1,003	)
Other		4,324			(774	)		(56	)		3,494
Valuation allowance		(30,049	)		(1,047	)		217			(30,879	)
Net deferred taxes		-			-			-			-

	Balance			Recognized			Foreign			Balance
	January 1, 2024			in Income			Exchange			December 31, 2024
Operating losses		35,690			(5,771	)		(785	)		29,134
Research and development		367			(4	)		(9	)		354
Property and equipment		(3,883	)		1,216			91			(2,576	)
Capitalized software and other assets		(1,033	)		(168	)		14			(1,187	)
Other		3,388			918			18			4,324
Valuation allowance		(34,529	)		3,809			671			(30,049	)
Net deferred taxes		-			-			-			-

For the year ended December 31, 2025, the Company recorded valuation allowances of $1.0 million against deferred tax assets incurred during the year. A valuation allowance is recognized to the extent that it is more likely than not that the deferred tax assets will not be realized (2024 – $3.8 million).

On an annual basis, the Company and its subsidiary file tax returns in Canada and various foreign jurisdictions. In Canada, the Company’s federal and provincial tax returns for the years 2020 to 2023 remain subject to examination by taxation authorities. In the United States, both the federal and state tax returns filed for the years 2019 to 2023 remain subject to examination by the taxation authorities.

Tax loss carryforwards and other tax pools

The significant components of the Company’s net future income tax deductions in these consolidated financial statements are summarized as follows:

	2025		2024		2025		2024
	C$		C$		$		$
Non-capital loss carry-forwards		111,055		86,108		43,056		51,312
Undepreciated capital costs		2,925		5,637		5,096		2,815
Share issuance costs		1,018		2,444		-		-
Scientific research and experimental development    tax incentives		1,971		1,971		-		-
Total future tax deductions		116,969		96,160		48,152		54,127