Income Taxes

12 Months Ended

Jun. 30, 2025

Income Taxes [Abstract]

Income taxes

15. Income taxes

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties.

ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the years ended June 30, 2025 and 2024, the change in the valuation allowance was $5,339,652 and $3,425,000, respectively. After the end of fiscal year 2025, on July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, which includes several tax related provisions that may impact the Company beginning in fiscal year 2026. We are currently evaluating the potential impact of OBBBA on our consolidated financial statements for future periods.

The disaggregation of the Company's Canadian and foreign pre-tax loss for the years ended June 30, 2025 and 2024 is as follows:

	June 30, 2025			June 30, 2024
Canada	$	(2,715,386	)	$	(30,831,794	)
Foreign		(2,634,481	)		(3,136,454	)
	$	(5,349,867	)	$	(33,968,248	)

The following is a reconciliation between statutory income taxes and the income tax expense for years ended June 30, 2025 and 2024:

	June 30, 2025			June 30, 2024
Loss before tax	$	5,349,867		$	33,968,248
Statutory tax rate		27	%		27	%
Expected tax recovery at statutory rate		(1,444,464	)		(9,172,000	)
Impact of foreign tax rate		(15,766	)		-
Impact of permanent differences		(3,570,201	)		5,622,000
SR&ED and IRAP government assistance		-			(327,000	)
Foreign exchange and other		(308,426	)		452,000
Change in valuation allowance		5,339,652			3,425,000
Income tax expense	$	795		$	-
Current income tax	$	795		$	-
Deferred income tax		-			-
Income tax expense	$	795		$	-

The Company’s deferred tax assets are as follows for the year end June 30, 2025 and 2024:

	June 30, 2025			June 30, 2024
Deferred tax asset:
Financing cost	$	609,684		$	562,282
Non-capital loss carry forward		22,149,686			17,158,967
Property and equipment		366,964			368,513
ROU liability		164,585			244,036
Convertible promissory note		240,861			-
CECL		64,288			-
Capitalized R&D		1,129,727			1,120,043
Deductible SR&ED pool		1,444,099			1,647,638
Non-refundable BC ITCs		407,267			405,957
Non-refundable federal ITCs		286,478			285,557
Other		233,171			-
Total deferred tax assets		27,096,810			21,792,993
Deferred tax liabilities:
ROU asset		(142,472	)		(179,572	)
Pre-paid security purchase		(5,255	)		(20,194	)
BC proxy SR&ED		-			(208,182	)
Federal ITC claimed during the year		-			-
Total deferred tax liabilities		(147,727	)		(407,948	)
Total deferred tax assets/liabilities		26,949,083			21,385,045
Less: valuation allowance		(26,949,083	)		(21,385,045	)
Net deferred tax assets (liabilities)	$	-		$	-

The Company has unclaimed Canadian SR&ED expenditures of approximately $6,102,364 as at June 30, 2025 and 2024, which can be carried forward indefinitely to reduce future years’ taxable income. The balance is included as a reduction to research and development expense.

The Company has also received approximately $277,000 (over 2019, 2020, 2021, 2022 and 2023) in assistance from the Government of Canada through the Industrial Research Assistance Program (“IRAP”) administered by the National Research Council of Canada.

At June 30, 2025, the Company had Canadian non-capital losses carry-forward of $75,036,390 (June 30, 2024 – 58,606,697) which expires over 2038 through 2045, and a US net operating loss carry forward of $8,441,315 (June 30, 2024 – $6,357,899) which can be carried forward indefinitely.

The amount and expiry date of deductible temporary differences, unused tax losses and unused tax credits for which no deferred tax asset is recognized in the statement of financial position are as follows:

Jurisdiction	Expiry	Operating losses		SR&ED expenditure pool		Investment tax credit
Canada	Indefinite	$	-	$	6,102,364	$	-
Canada	2038-2045		75,036,390		-		-
US - Federal	2042-2045		-		5,379,650		-
US - Federal	Indefinite		8,441,315		-		-
US - California	2042-2045		14,576,222		-		-
UK	Indefinite		616,731		-		-
		$	98,670,658	$	11,482,014	$	-

Our ability to use our net operating loss carry-forwards and certain other tax attributes may be limited.

Under Section 382 of the Internal Revenue Code of 1986, as amended, referred to as the Internal Revenue Code, if a corporation undergoes an “ownership change” (generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period), the corporation’s ability to use its pre-change net operating loss carry-forwards and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited. We may also experience ownership changes in the future as a result of subsequent shifts in our stock ownership, including as a result of the completion of the business combination when it is taken together with other transactions we may consummate in the succeeding three-year period. As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carry-forwards to offset U.S. federal taxable income may be subject to limitations, which potentially could result in increased future tax liability to us. We have not yet determined the amount of the cumulative change in our ownership resulting from the recent transactions, or any resulting limitations on our ability to utilize our net operating loss carryforwards and other tax attributes. As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carry-forwards to offset U.S. federal taxable income may be subject to limitations, which potentially could result in increased future tax liability to us.