Note 14 - Income Taxes

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE 14 – INCOME TAXES

A reconciliation of the effective tax rate of the income tax benefit and the statutory income tax rates applied to the loss before income taxes is as follows for the three and nine-months ended September 30:

	2021			2020
Income tax benefit at Canadian statutory rate		26.5	%		26.5	%
Valuation allowance		(26.5	%)		(26.5	%)
Effective income tax rate		0	%		0	%

As of September 30, 2021, the Company has net operating loss carry forwards of approximately $29,200,000 that may be available to reduce future years’ taxable income. Such carry forwards typically expire after 20 years. The Company currently has carry forwards that begin to expire in 2034. Future tax benefits which may arise as a result of these losses have not been recognized in these consolidated financial statements, because the Company believes that it is more likely than not that the carryforwards will expire unused and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. The deferred tax asset and associated valuation allowance are as follows for the period ended September 30, 2021 and the year ended December 31, 2020:

	September 30, 2021			December 31, 2020
Deferred tax asset - net operating losses	$	7,700,000		$	3,400,000
Deferred tax asset valuation allowance		(7,700,000	)		(3,400,000	)
Net deferred tax asset	$	-		$	-

The valuation allowance increased $100,000 and $700,000 for the three-months ended September 30, 2021 and 2020, respectively, and $4,300,000 and $1,400,000 for the nine-months ended September 30, 2021 and 2020, respectively. All other temporary differences are immaterial both individually and in the aggregate to the condensed consolidated financial statements.

Company management analyzes its income tax filing positions in Canadian federal and provincial jurisdictions where it is required to file income tax returns, for all open tax years in these jurisdictions, to identify potential uncertain tax positions. As of September 30, 2021, there are no uncertain income tax positions taken or expected to be taken that would require recognition of a liability or disclosure in the condensed consolidated financial statements. The Company is subject to routing audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. Generally, the Company is no longer subject to income tax examinations for years prior to 2017.