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Income Taxes
 12 Months Ended
Feb. 28, 2025
Income Taxes  
Income Taxes

23. Income Taxes

 

The components of the Company’s loss before taxes are summarized below:

 

 

 

February 28,

2025

 

 

February 29,

2024

 

U.S. operations

 

$

(6,049

)

 

$

(6,012)

Foreign operations

 

 

(9,008

)

 

 

(15,075)

Loss before taxes

 

$

(15,057

)

 

$

(21,087)

A reconciliation from the statutory U.S. income tax rate and the Company’s effective income tax rate, as computed on loss before taxes, is as follows:

 

 

 

February 28,

2025

 

 

February 29,

2024

 

Statutory Federal rate

 

 

21%

 

 

21%

 

 

 

 

 

 

 

 

 

Federal income tax at statutory rate

 

$

(3,162

)

 

$

(4,427)

Effect of foreign jurisdiction

 

 

(410

)

 

 

(937)

Non-deductible expenses

 

 

1,641

 

 

 

1,435

 

Tax credits related to research and development expenditures

 

 

(340

)

 

 

(367)

Change in valuation allowance and other items

 

 

2,271

 

 

 

4,296

 

Effective income tax expense

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

Current

 

$-

 

 

$-

 

Deferred

 

$-

 

 

$-

 

 

The Company has net operating loss carry forwards of approximately $36,285 (2024 – $37,472) for U.S. Federal income tax purposes expiring between 2035 and 2038, post 2018 net operating losses may be carried forward indefinitely. The Company has net operating loss carry forwards for Canadian Federal and Québec tax purposes of approximately $80,560 (CDN$109,168), 2024 - $83,073 (CDN$112,797), and $86,816 (CDN$117,651), 2024 - $89,532 (CDN$121,572), respectively, expiring between 2037 and 2045. Realization of future tax assets is dependent on future earnings, the timing and amount of which are uncertain. Accordingly, the net future tax assets have been fully offset by a valuation allowance. The valuation allowance increased by $1,260 and $4,905, respectively, for the years ended February 28, 2025 and February 29, 2024. The Company has provided a full valuation allowance on the deferred tax assets as a result of the uncertainty regarding the probability of its realization.

 

The Company has approximately $10,517 (CDN$15,185), 2024 - $9,506 (CDN$12,903) of research and development expenditures for Canadian Federal and Québec provincial purposes that are available to reduce taxable income in future years and have an unlimited carry forward period, the benefit of which has not been reflected in these financial statements. Research and development expenditures are subject to audit by the taxation authorities and accordingly, these amounts may vary.

The tax effect of temporary differences between US GAAP accounting and federal income tax accounting creating deferred income tax assets and liabilities were as follows:

 

 

 

As at

 

 

 

February 28,

2025

 

 

February 29,

 2024

 

Deferred tax assets

 

 

 

 

 

 

Canada net operating loss carry forward

 

$

20,703

 

 

$22,765

 

U.S. net operating loss carry forward

 

 

7,620

 

 

 

7,869

 

Accrual and reserves

 

 

691

 

 

 

616

 

Intangibles

 

 

357

 

 

 

304

 

Property, plant and equipment

 

 

4,115

 

 

 

1,914

 

Research and development expenditures and credits

 

 

4,745

 

 

 

4,428

 

Basis in partnership

 

 

235

 

 

 

235

 

Other

 

 

1,828

 

 

 

859

 

Deferred tax assets 

 

 

40,294

 

 

 

38,990

 

Deferred tax liabilities

 

 

 

 

 

 

 

 

Intangibles

 

 

(453

)

 

 

(409)

Deferred tax liabilities

 

 

(453

) 

 

 

(409)

 

 

 

 

 

 

 

 

 

Deferred tax assets, net

 

 

39,841

 

 

 

38,581

 

Valuation allowance

 

 

(39,841

)

 

 

(38,581)

Deferred tax assets, net

 

$

-

 

 

$-

 

 

Assessment of the amount of value assigned to the Company's deferred tax assets under the applicable accounting rules is judgmental. The Company is required to consider all available positive and negative evidence in evaluating the likelihood that the Company will be able to realize the benefit of its deferred tax assets in the future. Such evidence includes scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and the results of recent operations. Since this evaluation requires consideration of events that may occur some years into the future, there is an element of judgment involved. Realization of the Company's deferred tax assets is dependent on generating sufficient taxable income in future periods. Management does not believe that it is more likely than not that future taxable income will be sufficient to allow it to recover substantially all of the value assigned to its deferred tax assets. Accordingly, the Company has provided for a valuation allowance of the Company's deferred tax assets.

 

The tax years subject to examination by major tax jurisdiction include the years ended February 28, 2019 and forward by the U.S. Internal Revenue Service and most state jurisdictions, and the years ended February 28, 2019 and forward for the Canadian jurisdiction.