XML 29 R18.htm IDEA: XBRL DOCUMENT

Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Note 12 – Income Taxes

The provision for income taxes for the Company consists of the following for the periods ended December 31, 2018 and 2017:

		December 31, 2018				December 31, 2017
Current:
Federal		$	—			$	—
State			—				—
Total current expense			—				—

Deferred:
Federal			1,900				1,308
State			679				468
Change in valuation allowance			(2,579	)			(1,776	)
Total deferred expense			—				—
Total provision		$	—			$	—

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

The significant components of the Company’s deferred tax assets as of December 31, 2018 and 2017 are as follows:

		December 31, 2018				December 31, 2017
Net operating losses		$	3,968			$	1,610
Stock-based expenses			233				102
Accruals and other			154				64
Total deferred tax assets			4,355				1,776
Valuation allowance			(4,355	)			(1,776	)
Net deferred tax assets		$	—			$	—

Based on the uncertainty of future taxable income at this time management believes a 100% valuation reserve for the $4,355 deferred tax asset is appropriate.

A reconciliation of the statutory federal tax rate to effective tax rate is shown below:

		Year ended December 31, 2018				Period from April 27, 2017 (inception) through December 31, 2017
Benefit at statutory rate			(21.0)%				(34.0)%
Permanent items (primarily warrants and stock compensation)			6.0				4.4
State tax benefit			(5.3)				(5.5)
Federal rate change			—				10.2
Other items			—				—
Establishment of valuation allowance			20.3				24.9
Income tax expense			—%				—%

The Tax Act significantly revised U.S. corporate income tax law by, among other things, reducing the corporate income tax rate from 34% to 21% and implementing a modified territorial tax system. Implementation of the Tax Act resulted in a $733 charge for the revaluation of the Company’s net deferred tax assets offset by a corresponding $733 reduction in the valuation reserve for income taxes during the period ended December 31, 2017.

The Company has a federal and state NOL carryforward of $13,921 as of December 31, 2018, of which $5,648 will begin to expire in 2037 and 2039, respectively. Under the Tax Act, federal NOLs incurred in taxable years ending after December 31, 2017, may be carried forward indefinitely, but the deductibility of federal NOLs generated in tax years beginning after December 31, 2017, is limited. It is uncertain if and to what extent various states will conform to the Tax Act.

In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited. The Company is currently performing a study to determine if it has triggered an “ownership change” limitation at the completion of its IPO in November 2018.