Annual report pursuant to Section 13 and 15(d)

Provision for Income Taxes

v3.20.1
Provision for Income Taxes
12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Provision for Income Taxes

NOTE 11. PROVISION FOR INCOME TAXES

The components of the Company’s loss before the provision for income taxes consisted of the following:

 

 

 

Year Ended

 

 

 

December 31,

 

 

 

2019

 

 

2018

 

United States of America

 

$

(63,624

)

 

$

(61,169

)

Foreign

 

 

94

 

 

 

87

 

Total

 

$

(63,530

)

 

$

(61,082

)

 

The provision for income taxes consisted of the following for the years ended December 31, 2019 and 2018:

 

 

 

Year Ended

 

 

 

December 31,

 

 

 

2019

 

 

2018

 

Current

 

 

 

 

 

 

 

 

Federal

 

$

 

 

$

 

State

 

 

19

 

 

 

6

 

Foreign

 

 

18

 

 

 

16

 

Total Current Provision

 

 

37

 

 

 

22

 

 

 

 

 

 

 

 

 

 

Deferred

 

 

 

 

 

 

 

 

Federal

 

 

(14,188

)

 

 

(12,146

)

State

 

 

(1,073

)

 

 

(4,809

)

Foreign

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in valuation allowance

 

 

13,772

 

 

 

16,955

 

Total deferred (benefit) provision

 

 

(1,489

)

 

 

 

Total (benefit) provision

 

$

(1,452

)

 

$

22

 

 

A reconciliation of the statutory U.S. federal income tax rate to the Company's effective tax rate for the years ended December 31, 2019 and 2018 is as follows:

 

 

 

Year Ended

 

 

 

December 31,

 

 

 

2019

 

 

2018

 

Tax, computed at the federal statutory rate

 

 

21.00

%

 

 

21.00

%

State taxes, net of federal tax benefit

 

 

1.17

 

 

 

6.23

 

Meals, entertainment and other

 

 

(0.55

)

 

 

(0.02

)

Benefit from basis difference in acquired asset

 

 

2.34

 

 

 

 

Change in valuation allowance

 

 

(21.68

)

 

 

(27.25

)

Benefit from (provision for) income taxes

 

 

2.28

%

 

 

(0.04

%)

 

The significant components of the Company’s deferred income tax assets and liabilities as of December 31, 2019 and 2018 were as follows:

 

 

 

Year Ended

 

 

 

December 31,

 

 

 

2019

 

 

2018

 

Net operating losses

 

$

38,674

 

 

$

30,112

 

Stock-based compensation

 

 

10,702

 

 

 

7,141

 

Accrued expenses

 

 

180

 

 

 

178

 

Research credits

 

 

710

 

 

 

547

 

Other

 

 

577

 

 

 

682

 

Gross deferred tax assets

 

 

50,843

 

 

 

38,660

 

Less:  valuation allowance

 

 

(49,005

)

 

 

(35,233

)

Total deferred tax assets

 

 

1,838

 

 

 

3,427

 

 

 

 

 

 

 

 

 

 

Other - fixed assets and intangibles

 

 

(1,838

)

 

 

(3,427

)

Total deferred tax liabilities

 

 

(1,838

)

 

 

(3,427

)

Net deferred tax assets

 

$

 

 

$

 

 

The Company has evaluated the available positive and negative evidence supporting the realization of its gross deferred tax assets, including its cumulative losses, and the amount and timing of future taxable income, and has determined it is more likely than not that the assets will not be realized. Accordingly, the Company recorded a full valuation allowance as of December 31, 2019 and 2018 against its U.S. federal and state deferred tax assets as of December 31, 2019 and 2018.

The change in the valuation allowance for the years ended December 31, 2019 and 2018 is as follows:

 

 

 

Year Ended

 

 

 

December 31,

 

 

 

2019

 

 

2018

 

Valuation allowance, at beginning of year

 

$

35,233

 

 

$

18,278

 

Increase in valuation allowance

 

 

13,772

 

 

 

16,955

 

Valuation allowance, at end of year

 

$

49,005

 

 

$

35,233

 

 

As of December 31, 2019, the Company has federal and state income tax net operating loss carryforwards of approximately $162,901 and $157,965, respectively. The U.S. federal and state net operating losses will begin to expire in 2034 and 2020, respectively, unless previously utilized. Net operating loss carryforwards generated after January 1, 2018 may be carried forward indefinitely, subject to the 80% taxable income limitation on the utilization of the carryforwards. In addition, the Company had federal and state research and development credit carryforwards of approximately $505 and $260, respectively, as of December 31, 2019. The federal research and development credit will begin to expire in 2036 if unused and the state research and expenditure credit may be carried forward indefinitely. Certain tax attributes may be subject to an annual limitation in the event there has been or is a change of ownership as defined under Internal Revenue Code Section 382.

The Company is subject to taxation in the United States and various states. Its U.S. federal tax returns and state returns are open for examination for tax years 2014 and forward. The Company is not currently under examination from tax authorities in the jurisdictions in which the Company does business.

The Tax Cuts and Jobs Act (“TCJA”) was enacted in December 2017. Impacts of the TCJA for the year ended December 31, 2017 included remeasuring federal deferred tax assets and liabilities due to the reduction of the U.S. corporate income tax rate from 35% to 21%. In connection with the TCJA, the SEC issued guidance with allowed a year to finalize the income tax effect of the TCJA. Other aspects of the TCJA did not take effect until 2018. As of December 31, 2019, we have completed our accounting for the tax effects of the TCJA. No further adjustments were made with respect to the previously recorded provisional amounts.