Company: PRMLF
Filing Date: 2025-03-20
Form Type: 10-K
Source: 0001641172-25-000043
Chunk: 66

Company: NexMetals Mining Corp.
Filing Date: 2025-03-20
Form: 10-K
Item: Item 1A
Chunk 66
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, RSUs and warrants into Common Shares would be anti-dilutive given the Company’s
ongoing net loss position.

    F-13

Notes
to the Consolidated Financial Statements

For
the years ended December 31, 2024 and 2023

(Expressed
in Canadian dollars)

 (q) Income taxes

The
Company’s tax provision consists of taxes currently payable or receivable, plus any change during the period in deferred tax assets
and liabilities. The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets
and liabilities are recognized for certain temporary differences between the financial statement carrying amounts of assets and liabilities
and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in net loss in the period of the enactment date. In addition, a valuation allowance
is established to reduce any deferred tax asset for which it is determined that it is more likely than not that some portion of the deferred
tax asset will not be realized.

The
Company operates in multiple jurisdictions where uncertainties arise in the application of complex tax regulations. Therefore, there
are many transactions and calculations for which the ultimate tax determination is uncertain. Accounting for income taxes requires a
two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition
by determining if available evidence indicates it is more likely than not that the tax position will be sustainable based on its technical
merits. The second step is to measure the tax benefit as the largest amount with a greater than 50 percent likelihood of being realized
upon ultimate settlement. For tax positions that are 50 percent or less likely of being sustained upon audit, the Company does not recognize
any portion of that benefit in the financial statements. 

 (r) Derivative instruments

The
Company evaluates its financial instruments and other contracts to determine if those contracts, or embedded components of those contracts,
qualify as derivatives to be separately accounted for in accordance with ASC 815 – Derivatives and Hedging. The result of
this accounting treatment is that the fair value of the embedded derivative is marked-to-market at each balance sheet date and recorded
as an asset or liability and the change in fair value is recorded in net loss.

The
classification of derivative instruments, including