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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes

(8)Income Taxes

 

Our net income tax provision, including both current and deferred, related to U.S. federal and state income taxes, is $37. This is due to a change in law for the state of Illinois limiting the use of net loss deductions to $100 each year for tax years ending on or after December 31, 2021, and before December 31, 2024. Our current federal and deferred tax expenses are zero.

 

 

A reconciliation of income tax expense to the amount computed by applying the Federal income tax rate to loss before provision for income taxes as of December 31, 2021 and 2020 is as follows:

 

   2021   2020 
Income tax credit at statutory rates  $495   $208 
Nondeductible expenses   —    5 
Tax Exempt Income - PPP Loan   (271)   — 
Permanent Tax Deduction Stock Options Exercised   (63)   — 
State income tax, net of federal benefits   177    74 
Expiration of NOL & Credits   899    2,543 
Tax basis in excess of book Convertible Debt   —    — 
Expiration of Stock Options   92    122 
Other   2    (7)
Change in valuation allowance   (1,294)   (2,945)
 TOTAL  $37    — 

 

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. Significant components of our deferred income taxes consist of the following:

 

               
   As of December 31, 
   2021   2020 
Deferred tax liabilities:          
  Excess tax basis convertible debt  $—    (257)
     Total deferred tax liabilities   —    (257)
           
Deferred tax assets:          
  Net operating loss carryforwards  $14,566   $15,597 
  Inventory and other allowances   148    23 
  Charitable contribution & other carryforwards   —    9 
  Excess (tax) book depreciation   31    375 
  Excess (tax) book amortization   63    61 
  Share-based compensation   308    624 
  Other accrued costs   161    138 
     Total deferred tax assets   15,277    16,827 
           
  Less:  Valuation allowance   (15,277)   (16,570)
Deferred income taxes  $—   $— 

 

The valuation allowance decreased approximately $1.3 million and $6.4 million for the years ended December 31, 2021 and 2020, respectively (net of approximately $1 million and $6.3 million for the years ended December 31, 2021 and 2020, respectively, for expiring net operating loss carryforwards and credits) due principally to the change in the net operating loss carryforward and uncertainty as to whether future taxable income will be generated prior to the expiration of the carryforward period. Under the Internal Revenue Code, certain ownership changes, including the prior issuance of preferred stock and our public offering of common stock, may subject us to annual limitations on the utilization of our net operating loss carryforward. As of December 31, 2021, it has been determined that we are not subject to annual limitations on the utilization of our net operating loss carryforward.

 

We have federal net operating loss carryforwards for tax purposes of approximately $62 million on December 31, 2021. $57 million expire between 2022 and 2037. All net operating loss carryforwards generated after January 1, 2018 do not expire. Therefore, $5 million in net operating losses generated since January 1, 2018 do not expire. We have Illinois net loss deduction carryforwards for tax purposes of approximately $21 million on December 31, 2021. Due to the provisions of Illinois Public Act 102-0669 signed November 16, 2021, Illinois net loss deductions expire between 2029 and 2039.