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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Note 16. Income Taxes The provision for income taxes for the years ended December 31, 2019 and 2018 related to foreign taxes and state minimum taxes. The Company has incurred operating losses since inception in the US. Prior to the Corporate Conversion on June 21, 2018, the Company was a limited liability company in the United States, which is treated as a flow-through entity for Federal and state income tax purposes. Accordingly, the Company was not subject to U.S. income taxes until its conversion. The Company has evaluated the available evidence supporting the realization of its deferred tax assets, including the amount and timing of future taxable income, and has determined that it is more likely than not that its net deferred tax assets will not be realized in the United States and certain foreign jurisdictions. Due to uncertainties surrounding the realization of the deferred tax assets, the Company maintains a full valuation allowance against all of its net deferred tax assets. When the Company determines that it will be able to realize some portion or all of its deferred tax assets, an adjustment to its valuation allowance on its deferred tax assets would have the effect of increasing net income in the period such determination is made. A reconciliation of the income tax provision computed at statutory rates to the reported income tax provision for the years ended December 31, 2019 and 2018 is as follows:
| Year ended December 31, |
| 2019 |  |  | 2018 |
Statutory rate | 21.0% |  |  | 21.0% |
State tax expected (recovery), net of federal benefit | 6.7% |  |  | 2.6% |
Nondeductible expenses | (0.13)% |  |  | (2.9)% |
Loss incurred as pass-through | —% |  |  | (7.9)% |
Change in valuation allowance for deferred tax assets | (27.6)% |  |  | (12.8)% |
Provision for income taxes | (0.04)% |  |  | —% |
The net change in the valuation allowance was an increase of $12.4 million. The significant components of the Company’s deferred income tax assets and liabilities after applying enacted corporate tax rates are as follows:
| Year ended December 31, |
| 2019 |  |  | 2018 |
Deferred tax assets |  |  |  |  |  |  |
Net operating loss carryforwards | $ | 18,883,686 |  |  | $ | 7,578,570 |
Accrued expenses |  | 796,849 |  |  |  | 735,910 |
Intangibles |  | 355,288 |  |  |  | 290,098 |
Inventory |  | 78,206 |  |  |  | 66,935 |
Deferred rent |  | — |  |  |  | 65,574 |
Charitable contributions |  | 19,028 |  |  |  | 10,602 |
R&D credit |  | 394,981 |  |  |  | — |
Lease liabilities |  | 518,480 |  |  |  | — |
Stock compensation |  | 750,449 |  |  |  | — |
Deferred tax assets |  | 21,796,967 |  |  |  | 8,747,689 |
Less valuation allowance |  | (21,171,967 | ) |  |  | (8,722,389 | )
Total deferred tax assets |  | 625,000 |  |  |  | 25,300 |
Fixed assets |  | (15,222 | ) |  |  | (25,300 | )
Prepaid expenses |  | (220,673 | ) |  |  | — |
Right of use asset |  | (389,105 | ) |  |  | — |
Total deferred tax liabilities |  | (625,000 | ) |  |  | (25,300 | )
Deferred tax assets, net | $ | — |  |  | $ | — |
As of December 31, 2019 and 2018, the Company had accumulated non-capital losses totaling $3.5 and $3.7 million, respectively, in Germany which can be carried forward indefinitely, and net operating losses of $65.7 and $24.6 million respectively, in the U.S. (federal and state), which may be available to carry forward and offset future years’ taxable income. U.S. federal losses can be carried forward indefinitely, and state losses expire in various amounts beginning in 2026. However, the NOL carryforwards may be, or become subject to, an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, as well as similar state tax provisions. This could limit the amount of NOLs that the Company can utilize annually to offset future taxable income or tax liabilities. The amount of the annual limitation, if any, will be determined based on the value of the Company immediately prior to an ownership change. Subsequent ownership changes may further affect the limitation in future years. If and when the Company utilizes the NOL carryforwards in a future period, it will perform an analysis to determine the effect, if any, of these loss limitation rules on the NOL carryforward balances. Domestic and foreign components of loss before provision for income taxes is as follows:
| December 31, 2019 |  |  | December 31, 2018 |
Domestic | $ | (43,661,897 | ) |  | $ | (55,268,310 | )
Foreign |  | (1,468,287 | ) |  |  | (494,714 | )
Total | $ | (45,130,184 | ) |  | $ | (55,763,024 | )
The income tax provision from continuing operations contains the following components:
| December 31, 2019 |  |  | December 31, 2018 |
Federal | $ | — |  |  | $ | — |
State | $ | 7,712 |  |  | $ | 2,431 |
Foreign | $ | 9,987 |  |  | $ | — |
Total current |  | 17,699 |  |  |  | 2,431 |
Total deferred |  | — |  |  |  | — |
Total income tax expense/(benefit) | $ | 17,699 |  |  | $ | 2,431 |
Uncertain Tax Positions The Company has adopted certain provisions of ASC 740, “Income Taxes”, which prescribes a recognition threshold and measurement attribute for the recognition and measurement of tax positions taken or expected to be taken in income tax returns. The provisions also provide guidance on the de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, and accounting for interest and penalties associated with tax positions. The Company files income tax returns in the U.S. federal jurisdiction, and in various state and foreign jurisdictions. The Company’s tax returns are subject to tax examinations by U.S. federal and state tax authorities, or examinations by foreign tax authorities until the expiration of the respective statutes of limitation. The Company currently has no tax years under examination. As of December 31, 2019, the Company does not have an accrual relating to uncertain tax positions. Interest and penalties, if any, as they relate to income taxes assessed, are included in the income tax provision. It is not anticipated that unrecognized tax benefits would significantly increase or decrease within 12 months of the reporting date.

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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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