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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes |
1 0. | Income Taxes
The Company’s consolidated financial statements include a total tax benefit of zero and $6.7 million on loss before taxes of $53.7 million and $19.2 million for the years ended December 31, 2019 and 2018, respectively. Reconciliations of the differences between the benefit for income taxes and income taxes at the statutory U.S. federal income tax rate is as follows (dollars in thousands):
|  | 2019 |  |  | 2018 |
|  | Amount |  |  | Percent of Pretax Income |  |  | Amount |  |  | Percent of Pretax Income |
Income taxes from continuing operations at statutory rate |  | $ | (11,279 | ) |  |  | 21.0 | % |  | $ | (4,033 | ) |  |  | 21.0 | %
State income taxes |  |  | (3,778 | ) |  |  | 7.0 | % |  |  | (985 | ) |  |  | 5.1 | %
State effect of permanent items |  |  | 285 |  |  |  | (0.5 | )% |  |  | (585 | ) |  |  | 3.0 | %
Stock-based compensation |  |  | 100 |  |  |  | (0.2 | )% |  |  | 94 |  |  |  | (0.5 | )%
Deferred rate change |  |  | (905 | ) |  |  | 1.6 | % |  |  | 438 |  |  |  | (2.3 | )%
Warrants issuance |  |  | 733 |  |  |  | (1.4 | )% |  |  | (2,492 | ) |  |  | 13.0 | %
Other |  |  | 883 |  |  |  | (1.5 | )% |  |  | 71 |  |  |  | (0.3 | )%
NOL sale |  |  | — |  |  |  | — |  |  |  | (3,938 | ) |  |  | 20.5 | %
R&D credit adjustment |  |  | (2,760 | ) |  |  | 5.1 | % |  |  | — |  |  |  | — |
Increase in valuation allowance |  |  | 16,721 |  |  |  | (31.1 | )% |  |  | 4,694 |  |  |  | (24.4 | )%
Total income tax benefit |  | $ | — |  |  |  | — | % |  | $ | (6,736 | ) |  |  | 35.1 | %
The components of deferred tax assets and liabilities as of December 31, 2019 and 2018 are as follows (in thousands):
|  | December 31, |
|  | 2019 |  |  | 2018 |
Noncurrent deferred tax assets (liabilities) |  |  |  |  |  |  |  |
Accrued expenses |  | $ | 107 |  |  | $ | 132 |
Stock-based compensation |  |  | 2,436 |  |  |  | 1,911 |
Lease liability |  |  | 945 |  |  |  | — |
Other |  |  | (856 | ) |  |  | (31 | )
Net operating loss carryforwards |  |  | 58,073 |  |  |  | 44,730 |
Research and development credits |  |  | 5,984 |  |  |  | 3,226 |
Total deferred tax assets |  |  | 66,689 |  |  |  | 49,968 |
Valuation allowances |  |  | (66,689 | ) |  |  | (49,968 | )
Net deferred tax assets |  | $ | — |  |  | $ | — |
As of December 31, 2019 and 2018, the Company had available federal net operating loss ("NOL") carryforwards of approximately $242.4 million and $194.9 million, respectively, and state and net operating loss carryforwards of approximately $178.2 million and $150.8 million, respectively. Approximately $171.9 million of the federal NOLs can be carried forward to future tax years and expire at various times through 2037. The federal NOLs generated in December 31, 2019 and 2018 of approximately $47.5 million and $23.0 million, respectively, are carried forward indefinitely and do not expire. The Company’s state and net operating loss carryforwards began to expire in 2018. As of December 31, 2019, the Company had available federal research and development credit carryforwards of $5.3 million which begin to expire in 2022. The Company was eligible to receive cash from the sale of its Net Operating Losses under the New Jersey Technology Business Tax Certificate Transfer (NOL) Program. In January 2019, the Company received a cash receipt of approximately $6.7 million from the sale of its state NOLs and recognized an income tax benefit of $6.7 million for the year ended December 31, 2018 in the statement of operations. On December 22, 2017, the President signed into law the "Tax Cuts and Jobs Act.” The new tax reform has the following effects on the company: (1) permanently reduces the maximum corporate income tax rate from 35% to 21% effective for tax years beginning after December 31, 2017 (2) allows temporary 100% expensing for certain business assets and property placed in service after September 27, 2018 and before January 1, 2023 (3) disallows NOL carrybacks but allows for the indefinite carryforward of those NOLs which applies to losses arising in tax years beginning after December 31, 2018 and (4) limits NOL deductions for each year equal to the lesser of the available carryover or 80% of a taxpayer's pre-NOL deduction taxable income. This applies to losses arising in tax years ending on or after December 31, 2017. As of December 31, 2019 and 2018, the Company has concluded that it is more likely than not that the Company will not realize the benefit of its deferred tax assets due to its history of losses. Accordingly, the net deferred tax assets have been fully reserved. In accordance with Section 382 of the Internal Revenue Code of 1986, as amended, a change in equity ownership of greater than 50% within a three-year period results in an annual limitation on the Company’s ability to utilize its NOL carryforwards created during the tax periods prior to the change in ownership. The Company has determined that ownership changes have occurred and as a result, a portion of the Company’s NOL carryforwards are limited. Because the Company has incurred cumulative net operating losses since inception, all tax years remain open to examination by U.S. federal and state income tax authorities. The Company applies ASC 740-10-25-5, Income Taxes, formerly FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, as amended, on January 1, 2009. The difference between the tax benefit recognized in the financial statements and the tax benefit claimed in the tax return is referred to as an unrecognized tax benefit. The following is a tabular reconciliation of the total amounts of unrecognized tax benefits as of December 31, 2019 and 2018 (in thousands):
|  | December 31, |
|  | 2019 |  |  | 2018 |
Unrecognized tax benefit—January 1 |  | $ | 436 |  |  | $ | 436 |
Additions for tax positions of current period |  |  | — |  |  |  | — |
Additions for tax positions of prior periods |  |  | — |  |  |  | — |
Deferred rate change |  |  | — |  |  |  | — |
Unrecognized tax benefit—December 31 |  | $ | 436 |  |  | $ | 436 |
None of the unrecognized tax benefits would, if recognized, affect the effective tax rate because the Company has recorded a valuation allowance to fully offset federal and state deferred tax assets. The Company has no tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the coming year. The Company has $0 provided for interest and penalties associated with uncertain tax positions.

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- Definition 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. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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