Note 14 - Income Taxes
|12 Months Ended|
Dec. 31, 2020
|Notes to Financial Statements|
|Income Tax Disclosure [Text Block]||
Noprovision for income taxes has been recorded due to the net operating losses incurred from inception to date, for which
nobenefit has been recorded.
The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted on
March 27, 2020in the United States. The CARES Act includes several significant provisions for corporations, including the usage of net operating losses and payroll benefits. The Company is evaluating the impact, if any, the CARES Act and other economic stimulus measures will have on the Company's financials and disclosures.
The Company's effective tax rate is
for the years ended
December 31, 2020and
A reconciliation of the U.S. statutory income tax rate to the Company's effective tax rate is as follows:
The components of the Company's net deferred tax assets and liabilities are as follows (in thousands):
The Company has recorded a full valuation allowance for its deferred tax assets based on its past losses and the uncertainty regarding the ability to project future taxable income. The valuation allowance increased by approximately
$4,352,000during the year ended
December 31, 2020and decreased by approximately
$16,506,000during the year ended
December 31, 2019.
December 31, 2020,the Company has net operating loss (“NOL”) carryforwards for federal and state income tax purposes of approximately
$20,239,000,respectively. The federal NOLs do
notexpire and the state NOLs will begin to expire in the year
The Company also has California research and development tax credits of approximately
$817,000.The credits have
Utilization of the NOL and research and development credit carryforwards
maybe subject to a substantial annual limitation due to ownership changes that have occurred previously or that could occur in the future, as provided by Section
382of the Internal Revenue Code of
1986,as well as similar state provisions. Ownership changes
maylimit the amount of NOL and tax credit carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section
382,results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than
50percentage points over a
three-year period. The Company experienced a change of control in
November 2019,resulting in the expiration of a portion of the NOL and research and development credit carryforwards before utilization. Subsequent ownership changes could further impact the limitation in future years. A full valuation allowance has been provided against the Company's NOL carryforwards and research and development credit carryforwards and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be
nonet impact to the consolidated balance sheets or the consolidated statements of operations if an adjustment were required.
December 31, 2020,the Company had
notaccrued any interest or penalties related to uncertain tax positions.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
If the ending balance of
$245,000of unrecognized tax benefits as of
December 31, 2020were recognized,
noneof the recognition would affect the income tax rate. The Company does
notanticipate any material change in its unrecognized tax benefits over the next
twelvemonths. The unrecognized tax benefits
maychange during the next year for items that arise in the ordinary course of business.
The Company files U.S. federal and state income tax returns with varying statutes of limitations. All tax years since inception remain open to examination due to the carryover of unused net operating losses and tax credits.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef