Progressive Planet Solutions Inc V.PLAN

Q2 2025 Results (Post 10) Deferred Taxes

[15Stanmore]

Hello Fellow PLAN shareholders.

It is now Friday evening and I have spent the last 3 days deliberately avoiding the issue of PLAN Deferred Taxes. Like most Canadian citizens I do not enjoy the tax regime under which we operate, and as a retired Chartered Accountant enjoy even less the complex accounting principals we have adopted to report and disclose the impact of taxes on corporate entities.

We know tax expenses and liabilities are calculated at the legal entity level, whereas audited financial statements are often prepared on a consolidated basis as are thos published by Progressive Planet. Trying to tease apart the limited summary information contained in PLAN's consolidated statements, especially following the APL acquisition through purchase of all outstanding APL shares (as opposed to buying the tangible assets directly), makes the Gordion Knot look like childs play. Just have a look at Note 18 in the April 30, 2024 year end audited statements and you will see what I mean.

Prior to April 30, 2022 the situation was quite the opposite for there was no mention of income tax anywhere in the financial statements - no taxable income, no income tax expense or liabilities. Just $20 plus million of accumulated losses and writeoffs which, given no prospect of there ever being actual taxable earnings, did not even warrant a comment about their potential future value as tax shields.

Then the decison to acquire APL and deferred tax accounting hell arrived at Progressive Plant - thank goodness for accountants and the CICA Handbook.

Prior to its acquisition by PLAN, ABL reported Deferred Tax Liabilities on its balance sheet ($683,059 as at December 31, 2021) which related primarily to the temporary differences in tax payable because of accelerated write off of Plant & Equipment. These assets when fully depreciated for tax purposes can no longer shield operating income from tax, and the deferred liability would be unwound as the resultant tax is paid - the classic "temporary timing difference".

Once PLAN had acquired 100% of the outstanding shares of ABL, and the ABL operations consolidated with PLAN's ongoing operations, suddenly a $2,145,970 deferred tax liability pops up on PLAN's balance sheet at April 30, 2022. In the associated Note 18 the make-up of the $15,797,000 deferred tax asset is duly noted as well as the fact that the Company has not actually recognized this asset on the Balance sheet itself.

For my own evaluation purposes, while understanding the rationale and principals which require the liability to be recognized, I essentially ignore the this number and treat it as an increase to shareholder equity.

[winnerswing]

I think what is important here is that every time PLAN will make a profit in the future, a chunk of this substantial amount will be used to reduce the taxable profit before taxes so that overall less taxes will have to be paid. And IMO if this amount has not been recorded yet in the balance sheet, whether it is gonna be added in the liabilities or assets, the equivalent counterpart will have to

[15Stanmore]

Hello  Winnerswing, I fully agree with your assessment that the existance of substantial tax loss carry forwards, whether regognized immediately or only when actually applied against otherwise taxable income to eliminate taxes otherwise due and payable, is the real benefit here.  That being said, a decision to recognize more than just the next 12 months of benefit from the tax shield

[winnerswing]

Do you mean deferred tax assets could be used to directly finance NCIB regardless if used or not to reduce tax to pay, or NCIB could be financed from substantial cumulated tax savings from applied deferred tax assets advantage over long periods of time?

[Ciao]

What is the status of the pilot plant for Pozglass it was originally slated to be operational this year? 

[Ciao]

The latest update from the MDA in Q3 shows that they are behind in getting the pilot plant up and running (a "larger" pilot plant) as it still hinges on non-dilutive financing.  Progressive Planet has procured the majority of the equipment to start wet grinding of clean glass and is seeking non-dilutive funding to assist with funding the construction and operation of a larger

[Ciao]

correction: that should read Q2 MDA