ProMIS Neurosciences Inc. Income Taxes Disclosure
9.INCOME TAXES
As of December 31, 2025 and 2024, the net deferred tax assets have not been recognized in the accompanying consolidated financial statements. A valuation allowance is recognized to reduce the deferred tax asset as it is more likely than not that a tax benefit will not be realized.
The following are the significant components of the Company’s deferred taxes as of December 31:
| 2025 | | 2024 | |||
Non-capital losses carried forward | $ | 34,810,450 | $ | 24,850,000 | ||
Research and development expenditures |
| 3,022,831 |
| 3,175,000 | ||
Investment tax credits |
| 1,944,821 |
| 2,043,000 | ||
Tax value of technology rights and property and equipment in excess of accounting basis |
| 160,999 |
| 193,000 | ||
Share issue costs |
| 1,066,620 |
| 1,275,000 | ||
Non-deductible reserves | — | 10,000 | ||||
Restricted interest and financing expenses |
| — |
| 337,000 | ||
Total deferred income tax assets |
| 41,005,721 |
| 31,883,000 | ||
Valuation allowance |
| (41,005,721) |
| (31,883,000) | ||
Net deferred income tax assets | $ | — | $ | — | ||
As of December 31, 2025, the Company has available research and development expenditure credits for income tax purposes of approximately $11,407,000, which may be carried forward without expiration to reduce future taxable income.
As of December 31, 2025, the Company has non-capital income tax loss carry-forwards of approximately $131,360,190 available to reduce future income for income tax purposes. The income tax loss carry-forwards have expiry dates between the years 2026 and 2046.
As of December 31, 2025, the Company has approximately $2,553,000 of non-refundable investment tax credits available to offset future income taxes. The non-refundable investment tax credits have expiry dates between 2025 and 2035.
A reconciliation of the combined federal and provincial statutory income tax rate applied to the net (loss) income for the year to the income tax recovery as of December 31 is as follows:
Year Ended December 31, | ||||
| 2025 | | ||
Amount ($) | Percent (%) | |||
Canadian federal statutory income tax rate |
| (5,960,583) | 15.0 | % |
Provincial taxes (Ontario) | — | 11.5 | ||
Non-deductible expenses | 127,981 | (0.3) | ||
Share issue costs recorded, net of equity | (372,011) | 0.9 | ||
Change in valuation allowance | 6,027,731 | (26.8) | ||
Return to provision adjustments | 15,444 | (0.1) | ||
Other | 161,438 | (0.3) | ||
— | — | |||
The Company does not expect a significant change in the amount of unrecognized tax benefits over the next 12 months. However, any adjustments arising from certain ongoing examinations by tax authorities could alter the timing or amount of taxable income or deductions and these adjustments could differ from the amount accrued. The Company’s federal and provincial income tax returns files for all years remain subject to examination by the taxation authorities.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 25, 2026 | Showing above |
| 2024 | Mar 31, 2025 | |
| 2023 | Apr 1, 2024 | |
| 2022 | Mar 8, 2023 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.