INCOME TAXES

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

15. INCOME TAXES

Reconciliation of income taxes

The following reconciles income taxes calculated at the Canadian statutory rate with the actual income tax expense. The Canadian statutory rate includes federal and provincial income taxes. This rate was used because Canada is the domicile of the parent entity of the Company.

	For the Year Ended December 31,
	2023			2022			2021
Net loss before tax		(14,252	)		(54,942	)		(53,872	)
Canadian statutory rate		24.6	%		24.4	%		23.3	%
Expected income tax		(3,506	)		(13,406	)		(12,552	)
Effect on taxes resulting from:
Valuation allowance		4,224			13,590			12,046
Non-deductible expenses		189			422			542
Non-deductible stock-based compensation		-			23			189
Tax rate impacts		(243	)		(665	)		(488	)
Adjustments related to prior year tax filings		(332	)		57			59
Income tax expense		332			21			(204	)
Current tax expense		332			21			210
Deferred tax recovery		-			-			(414	)
Income tax expense		332			21			(204	)

The provision for income taxes is comprised of federal, state, provincial and foreign taxes based on pre-tax income. In the United States, the CARES Act of 2020 allows, among other provisions, for the recovery of taxes paid over the preceding five years from current year losses.

The Company’s U.S. subsidiary’s result was taxable income for the year ended December 31, 2023. The Company utilized prior year operating losses against this income; however, U.S. tax law does not allow for the full offset of losses against current year taxable income to reduce tax payable to zero. This resulted in current tax payable of $0.3 million in 2023.

Deferred tax assets and liabilities

Significant components of the Company’s deferred tax assets and liabilities as at December 31, 2023 and 2022 were as follows:

	As at December 31, 2023
	Assets		Liabilities			Net
Operating losses		35,690		-			35,690
Research and development expenditures		367		-			367
Property and equipment		-		(3,883	)		(3,883	)
Capitalized software and other assets		-		(1,033	)		(1,033	)
Valuation allowance		-		(34,529	)		(34,529	)
Other		3,388		-			3,388
Net deferred taxes		39,445		(39,445	)		-

	As at December 31, 2022
	Assets		Liabilities			Net
Operating losses		33,740		-			33,740
Research and development expenditures		336		-			336
Property and equipment		-		(6,017	)		(6,017	)
Capitalized software and other assets		-		(1,599	)		(1,599	)
Valuation allowance		-		(29,812	)		(29,812	)
Other		3,352		-			3,352
Net deferred taxes		37,428		(37,428	)		-

Summary of temporary difference movements during the year:

	Balance			Recognized			Foreign			Balance
	January 1, 2023			in Income			Exchange			December 31, 2023
Operating losses		33,740			1,431			519			35,690
Research and development expenditures		336			22			9			367
Property and equipment		(6,017	)		2,182			(48	)		(3,883	)
Capitalized software and other assets		(1,599	)		583			(17	)		(1,033	)
Valuation allowance		(29,812	)		(4,224	)		(493	)		(34,529	)
Other		3,352			6			30			3,388
Net deferred taxes		-			-			-			-

	Balance			Recognized			Foreign			Balance
	January 1, 2022			in Income			Exchange			December 31, 2022
Operating losses		24,032			10,924			(1,216	)		33,740
Research and development expenditures		362			(3	)		(23	)		336
Property and equipment		(7,572	)		1,410			145			(6,017	)
Capitalized software and other assets		(2,023	)		311			113			(1,599	)
Valuation allowance		(17,291	)		(13,590	)		1,069			(29,812	)
Other		2,492			948			(88	)		3,352
Net deferred taxes		-			-			-			-

For the year ended December 31, 2023, the Company recorded valuation allowances of $4.2 million against deferred tax assets (“DTAs”) incurred during the year. A valuation allowance is recognized to the extent that it is more likely than not that the deferred tax assets will not be realized (2022 – $13.6 million).

On an annual basis, the Company and its subsidiary file tax returns in Canada and various foreign jurisdictions. In Canada, the Company’s federal and provincial tax returns for the years 2019 to 2022 remain subject to examination by taxation authorities. In the United States, both the federal and state tax returns filed for the years 2018 to 2022 remain subject to examination by the taxation authorities.

Tax loss carryforwards and other tax pools

The significant components of the Company’s net future income tax deductions in these consolidated financial statements are summarized as follows:

	2023		2022		2023		2022
	C$		C$		$		$
Non-capital loss carry-forwards		114,119		106,730		55,469		55,654
Undepreciated capital costs		3,903		9,207		5,626		9,765
Share issuance costs		2,454		3,603		-		-
Scientific research and experimental development    tax incentives		1,971		1,971		-		-
Total future tax deductions		122,447		121,511		61,095		65,419