Income taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income taxes

20. Income taxes

The Company is current in its US and Canadian tax filings as of December 31, 2022, tax filings are due for the Company as of December 31, 2023 and 2024. 

The Company’s operations are based in the US and currently enacted tax laws in the US are used in the calculation of income taxes.

Federal Income Tax - United States

On December 22, 2017, the Tax Cuts and Jobs Act (the TCJA), which significantly modified U.S. corporate income tax law, was signed into law by President Trump. The TCJA contains significant changes to corporate income taxes, including but not limited to the reduction of the corporate income tax rate from a top marginal rate of 35% to a flat rate of 21%, limitation of the tax deduction for interest expense to 30% of earnings (except for certain small businesses), limitation of the deduction for net operating losses to 80% of current year taxable income and generally eliminating net operating loss carrybacks, allowing net operating losses to carryforward without expiration, one-time taxation of offshore earnings at reduced rates regardless of whether they are repatriated, elimination of U.S. tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits (including changes to the orphan drug tax credit and changes to the deductibility of research and experimental expenditures that will be effective in the future). Notwithstanding the reduction in the corporate income tax rate, the overall impact of the new federal tax law is uncertain, including to what extent various states will conform to the newly enacted federal tax law.

Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A full valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. It is the Company’s policy to classify interest and penalties on income taxes as interest expense or penalties expense. As of December 31, 2024 and 2023, there have been no interest or penalties incurred on income taxes.

The provision for income taxes consists of the following:

	Year ended December 31, 2024		Year ended December 31,  2023
Current
Federal	$	—	$	174,511
State		—		—
Foreign		—		—
	$	—	$	174,511
Deferred
Federal	$	—	$	217,451
State		—		—
Foreign		—		—
	$	—	$	217,451
Tax Benefit	$	—	$	391,962

The income tax provision/ (benefit) is different from that which would be obtained by applying the statutory Federal income tax rate of 21% and applicable state tax rates of 5.5% to income before income tax expense. The items causing this difference for the years ended December 31, 2024 and 2023 are as follows: 

	Year ended December 31, 2024			Year ended December 31, 2023
Taxation credit (charge) at the federal and state statutory rate	$	454,847		$	(129,035	)
State taxation		79,277			55,679
Prior year over provision		—			174,511
Permanent differences		—			(257,015	)
Foreign tax rate differential		—			(181,036	)
Prior year net operating loss true up		—			571,391
Forfeiture of net operating loss on disposal of subsidiary		—			(178,608	)
Valuation allowance		(534,124	)		336,075
Net tax benefit (expense)	$	—		$	391,962

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred tax assets and liabilities at December 31, 2024 and 2023 are as follows:

	December 31, 2024			December 31, 2023
Property and equipment	$	(121,881	)	$	(105,801	)
Intangible assets		221,352			158,108
Net operating losses		6,620,694			6,192,106
Other		83,365			24,993
		6,803,530			6,269,406
Valuation allowance		(6,803,530	)		(6,269,406	)
Net deferred income tax assets (liabilities)	$	—		$	—

The Company has established a valuation allowance against its gross deferred tax assets sufficient to bring its net deferred tax assets to zero due to the uncertainty surrounding the realization of such assets. Management has determined it is more likely than not that the net deferred tax assets are not realizable due to the Company’s historical loss position. The valuation allowance for the year ended December 31, 2024 increased by a total of $534,124.

As of December 31, 2024, the prior four tax years remain open for examination by the federal or state regulatory agencies for purposes of an audit for tax purposes.

As of December 31, 2024, the Company had available for income tax purposes approximately $31.2 million in federal and $2.3 million in state net operating loss carry forwards, which may be available to offset future taxable income. $8.1 million of the net operating losses will begin to expire in 2034 and $23.1 million has an indefinite life. Due to the uncertainty of the utilization and recoverability of the loss carryforwards and other deferred tax assets, Management has determined a full valuation allowance for the deferred tax assets since it is more likely than not that the deferred tax assets will not be realizable.

Pursuant to the Internal Revenue Code of 1986, as amended (“IRC”), §382, the Company’s ability to use its net operating loss carry forwards to offset future taxable income is limited if the Company experiences a cumulative change in ownership of more than 50% within a three-year period.