In the U.S. government enacted comprehensive tax legislation, the Tax Cuts and Jobs Act (the "Tax Act"), which significantly revises the U.S. tax code, generally effective by lowering the U.S. federal corporate income tax rate from to implementing a territorial tax system and setting limitations on the deductibility of certain costs (e.g. Interest expenses) among other things. As a Canadian entity, we generally would be classified as a foreign entity (and, therefore, a non-U.S. tax resident) under general rules of U.S. federal income taxation. However, we have a branch and U.S. subsidiary subject to U.S. federal income taxation. The Tax Act has impacted our consolidated results of operations during and and is expected to continue to impact our consolidated results of operations in future periods. The ultimate impact of the Tax Act on our effective tax rate in future periods will depend on interpretations and regulatory changes from the Internal Revenue.

 

 

For the years ended and the total comprehensive loss is as follows:

 

			December 31, 2019				December 31, 2018
Loss attributed to US foreign operations		$	(20,470	)		$	(21,807	)
Loss attributed to Canadian operations			(5,807	)			(7,061	)
Income (loss) before income taxes			(26,277	)			(28,868	)

 

 

Major items causing the Company’s income tax rate to differ from the statutory rate of approximately ( – ) are as follows:

 

			Year ended December 31, 2019				Year ended December 31, 2018
Net loss		$	(26,277	)		$	(28,868	)
Statutory Canadian corporate tax rate			26.5	%			26.5	%
Computed expected tax recovery		$	(6,963	)		$	(7,650	)
Non-deductible permanent differences			(1,305	)			1,422
Change in valuation allowance			12,146				4,528
Foreign tax rate differential			(286	)			(325	)
Foreign exchange differences			-				2,183
Prior year true-up adjustments			(3,563	)			-
Other			(29	)			(158	)
		$	-			$	-

 

 

The tax effects of temporary differences that give rise to significant portions of the unrecognized deferred tax assets are presented below:

 

			December 31, 2019				December 31, 2018
Net operating losses carried forward		$	26,786			$	19,567
Research and development expenditures			5,031				5,024
Property, equipment, and other intangible assets			4,191				4,161
Research and development tax credits			3,685				394
Financing costs			2,010				452
Right-of-use assets			41				-
Total deferred tax assets			41,744				29,598
Valuation allowance			(41,744	)			(29,598	)
Net deferred tax asset		$	-			$	-

 

The valuation allowance at was primarily related to net operating loss carryforwards that, in the judgment of management, are more-likely than- to be realized. In assessing the realizability of deferred tax assets, management considers whether it is more-likely than- that all or some portion of the deferred assets will be realized. This ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those deductible temporary difference become deductible. Based on the history of losses and projections for future taxable income, management believes that it is more-likely than- that the Company will realize the benefits of these deductible temporary differences (e.g. deferred tax assets).

 

The Company has undeducted research and development expenditures, totaling million that can be carried forward indefinitely. The Company also has Canadian non-refundable federal and provincial investment tax credits of approximately million which are available to reduce future federal taxes payable and begin to expire in as well as non-refundable US research and development tax credits of approximately million which are available to reduce future US taxes payable and begin to expire in

 

In addition, the Company has Canadian non-capital loss carryforwards of million. To the extent that the non-capital loss carryforwards are used, they begin to expire in The Company also has US non-capital loss carryforward of million, To the extent that the non-capital loss carryforwards are used, they begin to expire in

 

The Company files income tax returns with Canada and its provinces and territories. Generally we are subject to routine examinations by the Canada Revenue Agency ("CRA"). Income tax returns filed with various provincial jurisdictions are generally open to examination for periods of to years subsequent to the filing of the respective return.

 

The Company also files income tax returns for our U.S. operations and subsidiary with the U.S. federal and state tax jurisdictions. Generally, we are subject to routine examination by taxing authorities in the U.S. jurisdictions. There are presently examination of our U.S. federal and U.S. state returns. We believe that our tax positions comply with the applicable tax law.