Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.21.1
Income Taxes
12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Loss from continuing and discontinuing operations before income tax provision (benefit) consisted of the following (in thousands):
For the Year Ended December 31
2020 2019
United States $ (7,520) $ (5,619)
Foreign (481) (1,601)
Total $ (8,001) $ (7,220)

The provision (benefit) for income taxes from continuing and discontinuing operations consisted of the following (in thousands):
For the Year Ended December 31
2020 2019
Current:
State $   $ (512)
Deferred:
Federal $ (846) $ 687 
State (145) 766 
Foreign (433) (167)
(1,424) 1,286 
Change in valuation allowance 1,424  (1,286)
Total deferred $   $ — 
Total $   $ (512)

The provision (benefit) for income taxes from continuing and discontinuing operations for the years ended December 31, 2020 and 2019 differs from the approximate amount of income tax benefit determined by applying the U.S. federal income tax rate to pre-tax loss, due to the following:
 
  Year Ended December 31, 2020 Year Ended December 31, 2019
  Amount
(in thousands)
% of
Pretax
Loss
Amount
(in thousands)
% of
Pretax
Loss
Income tax benefit at federal statutory rate $ (1,680) 21.0  % $ (1,516) 21.0  %
State tax provision, net of federal tax benefit (148) 1.8  % 223  (3.1) %
Tax credits 20  (0.2) % 136  (1.9) %
Stock based compensation 16  (0.2) % 997  (13.8) %
Derivative warrants (41) 0.5  % (30) 0.4  %
Goodwill impairment     % 604  (8.4) %
Change in valuation allowance 1,424  (17.8) % (1,286) 17.8  %
Gain on sale of businesses 115  (1.4) %   —  %
Merger costs 170  (2.1) % 246  (3.4) %
Foreign operations 124  (1.6) % 109  (1.5) %
Other     % —  %
Income tax (benefit) provision $     % $ (512) 7.1  %

On April 4, 2019, the Company sold $11.6 million of gross State of New Jersey NOL’s relating to the 2017 tax year as well as $72 thousand of state research and development tax credits, resulting in the receipt of $512 thousand, net of expenses.
Approximate deferred taxes consist of the following components as of December 31, 2020 and 2019 (in thousands):
 
2020 2019
Deferred tax assets:
Net operating loss carryforwards $ 27,300  $ 26,317 
Accruals and reserves 1,212  1,544 
Stock based compensation 87  75 
Research and development tax credits 1,780  1,800 
Derivative warrant liability 17  17 
Interest deduction carryforward 1,500  1,470 
Investment in joint venture   161 
Intangible assets 114   
Other 6 
Total deferred tax assets 32,016  31,390 
Less valuation allowance (31,921) (30,497)
Net deferred tax assets 95  893 
Deferred tax liabilities
Fixed assets (95) (132)
Goodwill and intangible assets   (761)
Net deferred taxes $   $ — 

Due to a history of losses the Company has generated since inception, the Company believes it is more-likely-than-not that all of the deferred tax assets will not be realized as of December 31, 2020 and 2019. Therefore, the Company has recorded a full valuation allowance on its deferred tax assets. As a result of the Tax Cuts and Jobs Act, the federal net operating losses incurred after 2017 will have an indefinite carryforward. At December 31, 2020, the Company has net operating loss carryforwards for federal income tax purposes of $120.6 million, of which $98.9 million could expire over time, beginning in 2027, if not used. At December 31, 2020, the Company has $3.7 million of Australian net operating loss carryforwards and $20.1 million of New Jersey net operating loss carryforwards. At December 31, 2020, the Company also had $1.8 million of federal research and development tax credits, which expire in varying amounts between the years 2021 and 2038. Utilization of these carryforwards is subject to limitation due to ownership changes that may delay the utilization of a portion of the carryforwards.