67 / 111
66
The composition of our valuation allowance by tax jurisdiction is summarized as follows:
As of December 31,
2015
2014
Canada
$ 3,148
$ 3,055
United States
33,299
30,977
Total valuation
allowance
$ 36,447
$ 34,032
The valuation allowance increased $2,415 from the period ended December 31, 2014 to the calendar year
ended December 31, 2015. This was the result of an increase in the net deferred tax assets, primarily net operating
loss (“NOL”) carryforwards, equity compensation for U.S. residents, exploration spending on mineral properties,
research and experimental spending, and change in tax rates. Because we are unable to determine whether it is more
likely than not that the net deferred tax assets will be realized, we continue to record a 100% valuation against the
net deferred tax assets.
At December 31, 2015, we had U.S. NOL carryforwards of approximately $43,482, which expire from
2018 to 2035. In addition, we had Canadian non-capital loss carryforwards of approximately CDN$10,784, which
expire from 2016 to 2035. As of December 31, 2015, there were Canadian capital loss carryforwards of CDN$59.
A full valuation allowance has been recorded against the tax effected U.S. and Canadian loss carryforwards as we do
not consider realization of such assets to meet the required “more likely than not” standard.
Section 382 of the Internal Revenue Code could apply and limit our ability to utilize a portion of the U.S.
NOL carryforwards. No Section 382 study has been completed; therefore, the actual usage of U.S. NOL
carryforwards has not been determined.
Deferred tax assets relating to equity compensation have been reduced to reflect tax deductions in excess of
previously recorded tax benefits through the year ended December 31, 2015. Our NOL carryforwards referenced
above at December 31, 2015 and 2014 include $538 of income tax deductions in excess of previously recorded tax
benefits. Although these additional tax deductions are reflected in the NOL carryforwards referenced above, the
related tax benefit of $140 will not be recognized until the deductions reduce taxes payable. Accordingly, since the
tax benefit does not reduce our current taxes payable for the periods ending December 31, 2015 or 2014, these tax
benefits are not reflected in the deferred tax assets presented above. The tax benefit of these excess deductions will
be reflected as a credit to additional paid-in capital when recognized.
For financial reporting purposes, income/(loss) from continuing operations before income taxes consists of
the following components:
For the years ended December 31,
2015
2014
Canada
$ (617) $ (623)
United States
(9,061)
(13,406)
$ (9,678) $ (14,029)