What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-03-08 compared with 2022-03-09 · 48 added, 63 removed, 454 unchanged (20% of the section changed)

5 unchanged sentences

We have audited the accompanying consolidated balance sheets of International Tower Hill Mines Ltd.

(the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive loss, changes in shareholders’ equity, and cash flows for each of the years ended December 31, 2021 and 2020, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years ended December 31, 2021 and 2020, in conformity with accounting principles generally accepted in the United States of America.

(the “Company”), as of December 31, 2022 and 2021, and the related consolidated statements of operations and comprehensive loss, changes in shareholders’ equity, and cash flows for the years ended December 31, 2022 and 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years ended December 31, 2022 and 2021 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these financial statements based on our audits.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

3 unchanged sentences

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatements of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

6 unchanged sentences

Assessment of impairment indicators of mineral property

As described in Note 4 to the consolidated financial statements, the carrying amount of the Company’s mineral property was $55,375,124 as at December 31, 2021.

Management applies judgment to assess the mineral property for impairment indicators that could give rise to the requirement to conduct a formal impairment test.

Internal and external factors such as (i) significant decrease in the market price of the asset, (ii) current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset, (iii) significant changes in expected capital and operating costs, and reclamation costs, (iv) significant adverse changes in the business climate or legal factors including changes in gold prices, and (v) current expectation that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life, are evaluated by management in determining whether there are any indicators of impairment.

The principal considerations for our determination that the assessment of impairment indicators of the mineral property is a critical audit matter are that there was judgment by management when assessing whether there were indicators of impairment for the mineral property.

This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures to evaluate audit evidence relating to the judgments made by management in their assessment of indicators of impairment that could give rise to the requirement to conduct a formal impairment test.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures include, among others, evaluating management’s assessment of indicators of impairment;

and assessing whether there has been a significant decrease in the market price of the asset, significant changes in the expected capital costs, operating costs, reclamation costs, and current period cash flow or operating losses combined with a history of losses or forecasted continued losses associated with the use of the asset, by considering the current and past performance of the mineral property including other third-party information and evidence obtained in other areas of the audit, as applicable.

The procedures performed also included (i) evaluating whether there were significant adverse changes in the business climate or legal factors including changes in gold prices by considering external market data and industry data;

and (ii) assessing the completeness of external and internal factors that could be considered as indicators of impairment of the Company’s mineral property, including consideration of evidence obtained in other areas of the audit.

As described in Note 4 to the financial statements, the carrying amount of the Company’s mineral property was $55,375,124 as at December 31, 2022.

As more fully described in Note 2 to the financial statements, management assesses its mineral property for indicators of impairment at each reporting period.

The principal considerations for our determination that the assessment of impairment indicators of the Company’s mineral property is a critical audit matter are that there was judgment made by management when assessing whether there were indicators of impairment for the mineral property, specifically relating to the assets carrying amount which is impacted by the Company’s intent and ability to continue to explore and evaluate its asset.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate audit evidence relating to the judgments made by management in their assessment of indicators of impairment that could give rise to the requirement to prepare an estimate of the recoverable amount of the mineral property.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements.

Our audit procedures included, among others:

● Obtaining an understanding of the key controls associated with evaluating the mineral property for indicators of impairment.

● Evaluating management’s assessment of impairment indicators.

● Evaluating the intent for the mineral property through discussion and communication with management.

● Reviewing the Company’s recent expenditure activity and expenditure budgets for future periods.

● Assessing compliance with agreements and expenditure requirements including vouching cash payments.

● Obtaining, on a test basis through government websites, confirmation of title to ensure mineral rights underlying the mineral property are in good standing.

We have served as the Company’s auditor since 2017.

21 unchanged sentences

unlimited number of authorized shares;

194,908,184 shares issued and outstanding at December 31, 2021 and 2020

195,313,184 and 194,908,184 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively

Contributed surplus

21 unchanged sentences

Other income (expense)

Loss on foreign exchange

Gain (loss) on foreign exchange

Interest income

23 unchanged sentences

Exchange difference on translating foreign operations

At-The-Market offering

Share issuance costs

( 5,980,288 )

5 unchanged sentences

Exchange difference on translating foreign operations

Exercise of options

Reallocation from contributed surplus

( 3,041,693 )

23 unchanged sentences

Issuance of common shares

Share issuance costs

Cash provided by financing activities

Effect of foreign exchange on cash and cash equivalents

Increase/(decrease) in cash and cash equivalents

Decrease in cash and cash equivalents

( 2,933,242 )

( 5,268,622 )

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

Non-cash transactions:

- Reallocation from contributed surplus from exercise of stock options $ 162,479 (December 31, 2021 - $ nil )

The accompanying notes are an integral part of these consolidated financial statements.

4 unchanged sentences

International Tower Hill Mines Ltd.

(“ITH” or the "Company") is incorporated under the laws of British Columbia, Canada.

(“ITH” or the “Company”) is incorporated under the laws of British Columbia, Canada.

The Company’s head office address is 2710-200 Granville Street, Vancouver, British Columbia, Canada.

15 unchanged sentences

As at March 7, 2023, management believes that the Company has sufficient financial resources to maintain its operations for the next twelve months.

In March 2020, the World Health Organization declared the novel coronavirus 2019 (“COVID-19”) a global pandemic.

This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn.

While it is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its ultimate effects on the Company’s business, results of operations or ability to raise funds at this time, the COVID-19 pandemic has not had any material adverse effects on the Company.

The COVID-19 pandemic of three years has resulted in supply chain disruptions, record high inflation and rising interest rates which all have impeded adversely the global economy and tightened the financial markets.

It is indeterminable when inflation will be back to a normal level and the economy will recover.

These have created uncertainties to whether financing would be available to the Company if the need for funding was to arise.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

103 unchanged sentences

Instead, impairment of receivables arising from operating leases should be accounted for in accordance with ASC 842, Leases.

These updates are effective beginning January 1, 2023, and the Company is currently evaluating ASU 2016-13 and ASU 2018-19 and the potential impact of adopting this guidance on its financial reporting.

These updates are effective beginning January 1, 2023, and the Company has evaluated ASU 2016-13 and ASU 2018-19 and adoption of this guidance is expected to have no impact on its financial reporting.

FAIR VALUE OF FINANCIAL INSTRUMENTS

61 unchanged sentences

The Company has taken steps to verify title to mineral properties in which it has an interest.

Although the Company has taken every reasonable precaution to ensure

that legal title to its properties is properly recorded in the name of the Company, there can be no assurance that such title will ultimately be secured.

Although the Company has taken every reasonable precaution to ensure that legal title to its properties is properly recorded in the name of the Company, there can be no assurance that such title will ultimately be secured.

ACCRUED LIABILITIES

6 unchanged sentences

A reconciliation of income taxes at statutory rates with the reported taxes is as follows for the years ended December 31, 2022 and 2021:

Loss before income taxes

Earnings (loss) for the year

( 3,041,693 )

3 unchanged sentences

( 1,614,678 )

( 1,220,054 )

Effect of change in tax rate

Share-based payments

Unrecognized items for tax purposes

Difference in tax rates in other jurisdictions

Change in statutory, foreign tax, foreign exchange rates and other

Permanent difference

Adjustment to prior years provision versus statutory tax returns

Change in valuation allowance

Change in unrecognized deductible temporary differences

( 1,530,604 )

1 unchanged sentence

The significant components of the Company’s deferred tax assets are as follows:

Deferred income tax assets (liabilities):

Mineral properties

Deferred tax assets (liabilities):

Exploration and evaluation assets

Property and equipment

Share issue costs

Net operating losses available for future periods

Non-capital losses available for future period

Valuation allowance

2 unchanged sentences

Net deferred tax asset

At December 31, 2021, the Company has available net operating losses for Canadian income tax purposes of approximately $ 23,013,000 and net operating losses for US income tax purposes of approximately $ 161,982,000 available for carry-forward to reduce future years’ taxable income, if not utilized, expiring as follows:

At December 31, 2022, the Company has available non-capital losses for Canadian income tax purposes of approximately C$ 27,596,000 and net operating losses for US income tax purposes of approximately $ 33,301,000 that do not have an expiration date and $ 137,152,000 available for carry-forward to reduce future years’ taxable income, if not utilized, expiring as follows:

United States ($)

4 unchanged sentences

The Company’s share capital consists of an unlimited number of authorized common shares without par value.

At December 31, 2020 and 2021, there were 194,908,184 shares issued and outstanding.

At December 31, 2022 and 2021, there were 195,313,184 and 194,908,184 shares issued and outstanding , respectively.

Share issuances

During the year ended December 31, 2022, the Company issued 405,000 common shares pursuant to the exercise of stock options for total proceeds of $ 290,290 and transferred related contributed surplus of $ 162,479 to share capital.

There were no share issuances during the year ended December 31, 2021.

On August 31, 2020, the Company entered into an At Market Issuance ("ATM") Sales Agreement with B.

Riley Securities, Inc.

Riley"), pursuant to which the Company was entitled, at its discretion and from time-to-time during the term of the sales agreement, to sell through B.

Riley such number of common shares of the Company as would result in aggregate gross proceeds to the Company of up to $ 10,300,000 (the "Offering").

The Company would pay B.

Riley a commission of up to 3 % of the gross proceeds from the sale of common shares pursuant to the ATM Sales Agreement.

During the year ended December 31, 2020, the Company issued 7,334,513 common shares pursuant to the Offering for gross proceeds of $ 10,299,277 .

Share issuance costs were $ 480,946 resulting in net proceeds of $ 9,818,331 from the Offering.

Stock options

8 unchanged sentences

All of the options vest one-third on the grant date, one-third on May 24, 2023, one-third on May 24, 2024 and expire on May 24, 2028 .

During the year ended December 31, 2020, the Company granted a total of 255,000 incentive stock options to employees of the Company to purchase common shares in the capital stock of the Company at an issue price of C$ 0.92 per share.

During the year ended December 31, 2021, the Company granted a total of 240,000 incentive stock options to certain officers and employees of the Company to purchase common shares in the capital stock of the Company at an issue price of C$ 1.31 per share.

Of the total 240,000 stock options granted, 150,000 were granted to Mr.

18 unchanged sentences

August 8, 2025

● Expiry dates revised to March 25, 2022

● Expiry dates automatically extended to March 25, 2022, the tenth business day following the end of a blackout period imposed on the holders of the stock options, pursuant to the terms of the Stock Option Plan.

A summary of the non-vested options as of December 31, 2022 and 2021 and changes during the fiscal years ended December 31, 2022 and 2021 is as follows:

12 unchanged sentences

As at December 31, 2022, the Company had stock options to potentially acquire 2,287,049 common shares outstanding under the Stock Option Plan (representing approximately 1.17 % of the outstanding common shares), leaving up to 17,244,269 common shares available for future grants under the DSU Plan and under the Stock Option Plan (combined) based on the number of outstanding common shares as at that date on a non-diluted basis (representing an aggregate of approximately 8.83 % of the outstanding common shares).

During the year ended December 31, 2021, in accordance with the DSU Plan, the Company granted each of the members of the Company’s Board of Directors (other than those directors nominated for election by Paulson & Co., Inc.) 63,359 DSUs for a total of 316,795 DSUs with a grant date fair value (defined as the weighted average of the prices at which the common shares traded on the exchange with the most volume for the five trading days immediately preceding the grant) of C$ 1.31 per DSU, representing C$ 83,000 per director or C$ 415,000 in the aggregate.

During the year ended December 31, 2020, in accordance with the DSU Plan, the Company granted each of the members of the Company’s Board of Directors (other than those directors nominated for election by Paulson & Co., Inc.) 90,217 DSUs for a total of 451,085 DSUs with a grant date fair value (defined as the weighted average of the prices at which the common shares

traded on the exchange with the most volume for the five trading days immediately preceding the grant) of C$ 0.92 per DSU, representing C$ 83,000 per director or C$ 415,000 in the aggregate.

During the year ended December 31, 2022, in accordance with the DSU Plan, the Company granted each of the members of the Company’s Board of Directors (other than those directors nominated for election by Paulson & Co.

Inc.) 90,217 DSUs for a total of 451,085 DSUs with a grant date fair value (defined as the weighted average of the prices at which the common shares traded on the exchange with the most volume for the five trading days immediately preceding the grant) of C$ 0.92 per DSU, representing C$ 83,000 per director or C$ 415,000 in the aggregate.

Inc.) 63,359 DSUs for a total of 316,795 DSUs with a grant date fair value (defined as the weighted average of the prices at which the common shares traded on the exchange with the most volume for the five trading days immediately preceding the grant) of C$ 1.31 per DSU, representing C$ 83,000 per director or C$ 415,000 in the aggregate.

The DSUs entitle the holders to receive common shares of the Company’s stock without the payment of any consideration.

14 unchanged sentences

During the year ended December 31, 2021, the Company granted 240,000 stock options and 316,795 DSUs.

Share-based payment compensation for the year ended December 31, 2020 totaled $ 385,531 ($ 90,914 related to stock options and $ 294,617 related to DSUs).

Share-based payment compensation for the year ended December 31, 2021 total $ 535,117 ($ 167,267 related to stock options and $ 367,850 related to DSUs).

Of the total expense for the year ended December 31, 2021, $ 380,878 was included in consulting fees, $ 143,957 was included in wages and benefits, and $ 10,282 was included in investor relations in the statement of operations and comprehensive loss.

20 unchanged sentences

( 1,363,483 )

( 1,134,685 )

Net loss for the year - United States

13 unchanged sentences

Does not include potential royalties that may be payable (other than annual minimum royalty payments).

RELATED PARTY TRANSACTIONS

On August 31, 2020, the Company entered into an At Market Issuance (“ATM”) Sales Agreement with B.

Riley Securities, Inc.

Riley”), pursuant to which the Company was entitled, at its discretion and from time-to-time during the term of the

sales agreement, to sell through B.

Riley such number of common shares of the Company as would result in aggregate gross proceeds to the Company of up to $ 10,300,000 (the “Offering”).

No offers or sales of common shares were made in Canada through the facilities of the TSX or other trading markets.

On September 2, 2020, the Company announced that its existing three largest shareholders had each taken their pro-rata share of the Offering, resulting in the issuance of 4,490,997 common shares (representing 2 % of the 187,573,671 shares previously issued and outstanding) at the September 1, 2020 closing market price of $ 1.40 per share for aggregate gross proceeds of $ 6,287,396 .

On December 12, 2019, the Company entered into a one-year operating lease agreement (for the lease period of January 1, 2020 through December 31, 2020) of the Fairbanks office.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data