Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.20.4
Income Taxes
12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of pre-tax (losses) income before income taxes for the years ended December 31, 2020, 2019 and 2018 are as follows:
(in thousands) 2020 2019 2018
Canada $ (61,024) $ (88,694) $ (53,290)
Foreign (41,750) 453  284 
$ (102,774) $ (88,241) $ (53,006)
Income tax (benefit) expense for the years ended December 31, 2020, 2019 and 2018 are as follows:
(in thousands) 2020 2019 2018
Current:
Canada $   $ —  $ — 
Foreign (94) 144  73 
(94) 144  73 
Deferred:
Canada   —  — 
Foreign   —  — 
Total deferred   —  — 
Income tax (benefit) expense $ (94) $ 144  $ 73 

The provision for income taxes varied from the income taxes provided based on the Canadian statutory rate of 26.8%, 25.4%, and 27.0% in the years ending December 31, 2020, 2019 and 2018, respectively.
2020 2019 2018
Canada statutory income tax benefit 26.8  % 25.4  % 27.0  %
Effect of tax rates on foreign jurisdictions (2.4) —  — 
Impact of future rates and tax rate changes 6.1  (0.9) — 
Non-deductible share-based compensation (4.5) (2.1) (3.5)
Change in valuation allowance (26.0) (22.3) (23.0)
Other 0.1  (0.3) (0.6)
Effective tax rate 0.1  % (0.2) % (0.1) %

The tax effects of the temporary differences giving rise to the Company's net deferred tax assets as of December 31, 2020 and 2019 are summarized as follows:
(in thousands) 2020 2019
Deferred tax assets:
Loss carry-forwards $ 80,087  $ 56,533 
Share issue costs 6,295  4,734 
Intangible assets 2,718  1,710 
SRED (Scientific Research and Experimental Development) 4,808  3,938 
Royalty obligation 4,006  2,005 
Other 5,243  2,553 
Total deferred tax assets 103,157  71,473 
Valuation allowance (101,792) (71,459)
Net deferred tax assets 1,365  14 
Deferred tax liabilities:
Right of use asset (1,173) — 
Property and equipment (192) (14)
Deferred tax liabilities (1,365) (14)
Net deferred tax assets (liabilities) $ —  $ — 

The Company’s valuation allowance increased by $30.3 million in 2020 as compared to 2019 as a result of the additional pre-tax book losses that the Company has determined are not more likely than not realizable.
At December 31, 2020, the Company had $307.8 million in total net operating loss (NOL) carryforwards which included $31.4 million for the U.S. and $272.4 million for Canada. The NOLs in the U.S. have an indefinite carryforward period. The NOLs in Canada will expire beginning 2029. As of December 31, 2020, the Company has approximately $3.9 million of Canada Investment Tax Credits and British Columbia Scientific Research and Experimental Development (SRED) with an expiration period of 2029-2040.

The Company is open to examinations with the applicable tax authorities prior to the expiration of statute of limitations, which ranges from tax years 2017 through 2019. The Company is currently under audit by the Canadian Revenue Agency for years 2017 and 2018.