INCOME TAXES

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

18. INCOME TAXES

For the year ended December 31, 2024 and 2023, loss before income tax provision consisted of the following:

	December 31, 2024			December 31, 2023
Domestic operations – Canada	$	(15,395,415	)	$	(10,981,917	)
Foreign operations - United States		(879,400	)		(751,293	)
Total loss before taxes	$	(16,274,815	)	$	(11,733,210	)

Income tax expense (benefit) consists of the following for the years ended December 31, 2024 and 2023:

	December 31, 2024			December 31, 2023
Loss before taxes	$	(16,274,815	)	$	(11,733,210	)
Statutory tax rate		27.00	%		27.00	%
Income taxes at the statutory rate	$	(4,394,200	)	$	(3,167,967	)
Change in fair value of derivative liabilities		(377,536	)		(2,525,761	)
Non-deductible accretion interest		671,064			1,665,506
Debt conversion and extinguishment losses		1,195,929			509,945
Stock-based compensation		109,803			314,023
Share issue costs		(126,529	)		(167,075	)
Foreign currency translation		1,159,454			(185,096	)
Other		(80,453	)		1,893
Total	$	(1,842,468	)	$	(3,554,532	)
Change in valuation allowance	$	1,842,468		$	3,554,532
Total income tax expense (benefit)	$	-		$	-

The Company is subject to Canadian federal and provincial tax for the estimated assessable profit for the years ended December 31, 2024 and 2023 at a rate of 27%.

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not that we will not realize those tax assets through future operations. Significant components of the Company’s deferred taxes are as follows:

	December 31, 2024			December 31, 2023
Deferred tax assets:
Unused net operating losses carry forward - Canada and United States	$	11,941,424		$	10,964,564
Share issue costs		261,984			285,654
Tangible capital assets		(51,391	)		2,692
Intangible capital assets		943,361			-
Total deferred tax assets		13,095,378			11,252,910
Valuation allowance		(13,095,378	)		(11,252,910	)
	$	-		$	-

The Company has non-capital losses of $38.7 million as of December 31, 2024 and $37.4 million as of December 31, 2023, which can be used to offset future taxable income in Canada, and are due to expire in the following years:

2038	$	1,855,758
2039		4,203,902
2040		2,166,985
2041		5,892,732
2042		10,250,711
Thereafter		14,375,687
	$	38,745,775

For foreign operations in United States, aggregate net operating losses are $3.8 million as of December 31, 2024 and $2.2 million as of December 31, 2023 which can be carried forward indefinitely. Non-Capital Losses in Canada can be carried forward after change of ownership, if the particular business which gave rise to the loss is carried on by the company for profit or with a reasonable expectation of profit. Certain accumulated net operating losses in United States are subject to an annual limitation from equity shifts, which constitute a change of ownership as defined under Internal Revenue Code (“IRC”) Section 382. These rules will limit the utilization of the losses. No analysis has been done as of December 31, 2024 since the Company continued to generate losses and no net operating losses have been utilized

The Company files income tax returns in Canada and the United States and is subject to examination in these jurisdictions for all years since the Company’s inception in 2017. As at December 31, 2024, no tax authority audits are currently underway.

The Company currently has no uncertain tax position and is therefore not reflecting any adjustments.