Note 15 - Income Taxes

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE 15 – INCOME TAXES

The Company has elected to file separate Canadian income tax returns for CEN (growth) and for CCM (digital).

Growth:

As of December 31, 2021, CEN has net operating loss carry forwards of approximately $31,400,000 that may be available to reduce future years’ taxable income. Such carry forwards typically expire after 20 years. CEN 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 CEN believes that it is more likely than not that the carryforwards will expire unused and accordingly, CEN 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 years ended December 31:

	2021			2020
Deferred tax asset - net operating losses	$	8,300,000		$	3,400,000
Deferred tax asset valuation allowance		(8,300,000	)		(3,400,000	)
Net deferred tax asset	$	-		$	-

The change in the valuation allowance amounted to $4,900,000 and $3,400,000 for the years ended December 31, 2021 and 2020, respectively. All other temporary differences are immaterial both individually and in the aggregate to the consolidated financial statements.

Digital:

The tax benefit for CCM income taxes consists of the following components:

	December 31, 2021
Current	$	(33,621	)
Deferred		(2,735	)
Net income tax benefit	$	(36,356	)

The net deferred income tax asset presented in the consolidated balance sheets is comprised of the following at:

	December 31,
	2021
Deferred tax assets
SR&ED credits	$	39,464
Deferred tax liabilities
Property and equipment		(11,357	)
Intangible assets, including goodwill		(25,387	)
Total deferred tax liabilities		(36,744	)
Net deferred tax asset	$	2,720

A reconciliation of the income tax benefit and the amount computed by applying the statutory Canadian federal income tax rate to CEN’s and CCM’s income before income tax benefit for the year ended December 31 is as follows:
 

	2021									2020
	Growth			Digital			Total			Growth			Digital		Total
Income tax (benefit) expense at statutory rate of 26.5%	$	(5,020,280	)	$	1,177		$	(5,019,103	)	$	3,776,156		$	-	$	3,776,156
Valuation allowance		5,020,280			-			5,020,280			(3,776,156	)		-		(3,776,156	)
SR&ED credits		-			(19,198	)		(19,198	)		-			-		-
Other		-			(18,335	)		(18,335	)		-			-		-
Income tax benefit	$	-		$	(36,356	)	$	(36,356	)	$	-		$	-	$	-

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 December 31, 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 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 2018.