Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.20.4
Income Taxes
12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes Income TaxesThe Company files U.S. federal and various U.S. state income tax returns. Due to the Company’s losses, there was no income tax expense for the years ended December 31, 2020 and 2019.
The income tax provision differs from the amount using the statutory federal income tax rate of 21% for 2020 and 2019 for the following reasons (in thousands):
December 31,
2020
December 31,
2019
Amount % Amount %
Tax benefit at the U.S. federal statutory rate $ (3,054) (21.00) % $ (2,888) (21.00) %
Tax rate change —  —  —  —  %
Permanent differences 0.03  % 25  0.18  %
Return to provision (5) (0.03) % (25) (0.18) %
Valuation allowance 3,054  21.00  % 2,888  21.00  %
Effective income tax rate $ —  —  % $ —  —  %
The effective income tax rate varied from the statutory rate in 2020 and 2019 primarily due to the increase in the valuation allowance. 
Deferred tax assets and liabilities consist of the following (in thousands):
December 31,
2020
December 31,
2019
Assets related to:
Accounts payable and accrued liabilities $ 592  $ 588 
Stock-based compensation 1,137  — 
Net operating losses and start-up costs 11,785  9,891 
Total deferred tax assets 13,514  10,479 
Valuation allowance for deferred tax assets (13,351) (10,297)
Net deferred tax 163  182 
Liabilities related to:
Accounts receivable and prepaid expenses (30) (20)
Depreciation and amortization (133) (162)
Net deferred tax liabilities (163) (182)
Net deferred tax assets $ —  $ — 

As of December 31, 2020, the Company’s filed tax returns include federal net operating loss (“NOL”) carryforwards of $56.1 million, including an NOL carryforward of $11.2 million for the year ended December 31, 2020. In addition, $24.6 million of this NOL carryforward begins expiring in 2032 through 2037. Under the new Tax Cuts and Jobs Act from 2018, carryforwards do not expire, but can only offset 80% of taxable income in the year the loss carryforward is used.
The Company has recorded a full valuation allowance against its net total deferred tax assets as of December 31, 2020 and 2019 because management determined that it is not more likely than not that those assets will be realized. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of deferred assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.
During the year ended December 31, 2020 and 2019, the valuation allowance increased by $3.1 million and $2.9 million, respectfully, due to additional net operating losses.