Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.22.4
Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Taxes  
Income Taxes

17. Income Taxes

 

Income (loss) before provision for income taxes consisted of the following:

 

                                                                                                                                        

 

 

      Year Ended December 31,

 

Income (Loss) before Income Tax Provision

 

2022

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

United States

 

 

 (15,638 )

 

 

 (13,438 )

 

 

 (11,164 )

Canada

 

 

 (1,481 )

 

 

 (9,470 )

 

 

 (3,561 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (17,119 )

 

 

 (22,908 )

 

 

 (14,725 )

 

There was no federal or state income tax provision (benefit) in the years presented above.

 

Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards.

The tax effects of significant items comprising the Company’s deferred tax assets are as follows:

                                                                                                                                                      

 

 

 As of December 31,

 

Deferred Tax Assets

 

2022

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

Deferred tax assets

 

 

 13,243

 

 

 

 12,841

 

 

 

 11,184

 

Net operating losses - non-current

 

 

 42,074

 

 

 

 38,800

 

 

 

 35,366

 

Total deferred tax assets

 

 

 55,317

 

 

 

 51,641

 

 

 

 46,550

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation allowance

 

 

 (55,317 )

 

 

 (51,641 )

 

 

 (46,550 )

 

 

 

 

 

 

 

 

 

 

 

 

 

Net deferred taxes

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

ASC 740 requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carryforward period. Because of the Company’s recent history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a valuation allowance.

 

The valuation allowance increased by $3,676, $5,090, and $6,017 during 2022, 2021, and 2020 respectively.

 

Net operating losses and tax credit carryforwards as of December 31, 2022, are as follows:

 

Income Tax Loss Carryforwards

 

Amount

 

 

Expiration Years

  

 

 

 

 

 

 

  

Net operating losses, federal (Pre-January 1, 2018)

 

 

 79,699

 

 

2029 - 2035

  

Net operating losses, federal (Post December 31, 2017)

 

 

 36,860

 

 

No expirations

  

Net operating losses, state

 

 

 116,127

 

 

Varies by state

  

Net operating losses, Canada

 

 

 43,243

 

 

2026 - 2040

  

The effective tax rate of the Company’s provision (benefit) for income taxes differs from the federal statutory rate as follows:

 

                                                                                                                                            

 

 

    Year Ended December 31,

 

Income Tax Rate Reconciliation

 

2022

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

Canadian Statutory rate

 

 

 26.5 %

 

 

 26.5 %

 

 

 26.5 %

State tax

 

 

 -2.1 %

 

 

 4.2 %

 

 

 18.2 %

Permanent differences

 

 

 1.1 %

 

 

 -5.1 %

 

 

 -2.0 %

True-ups and other

 

 

 0.2 %

 

 

 -

 

 

 

 0.8 %

Effect of U.S. Federal Tax Rate Differential

 

 

 -5.0 %

 

 

 -3.2 %

 

 

 -4.2

% 

Share issuance costs

 

 

 3.4 %

 

 

 -

 

 

 

 -

Change in valuation allowance

 

 

 -25.6 %

 

 

 -22.4 %

 

 

 -39.3 %

ITC credits

 

 

 1.5 %

 

 

 -

 

 

 

 -

 

 

 

 

 0.0 %

 

 

 0.0 %

 

 

 0.0 %

 

The Company follows a comprehensive model for recognizing, measuring, presenting, and disclosing uncertain tax positions taken or expected to be taken on a tax return. Tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

 

The Company currently has no uncertain tax positions and is therefore not reflecting any adjustments for such in its deferred tax assets.

 

The Company’s policy is to account for income tax related interest and penalties in income tax expense in the accompanying  Consolidated Statements of Operations. There have been no income tax related interest or penalties assessed or recorded.

 

Other comprehensive loss was not subject to income tax effects and is therefore shown net of taxes.