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Taxes | 12 Months Ended
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Dec. 31, 2019
Taxes [Abstract] |
Taxes | 13. Taxes (Loss) income from continuing operations before taxes is comprised of the following components for the years ended December 31, 2018 and 2019 (in thousands):
|  | Year Ended December 31,
|  | 2018 |  | 2019
Domestic |  | $ | 20 |  | $ | (437)
Foreign |  |  | (8,645) |  |  | (8,689)
Loss from continuing operations before taxes |  | $ | (8,625) |  | $ | (9,126)
The benefit (provision) for income taxes from continuing operations consists of the following (in thousands):
|  | Year Ended December 31,
|  | 2018 |  | 2019
Current  –  domestic |  | $ | (5) |  | $ | (3)
Current  –  foreign |  |  | 1,342 |  |  | 1,299
Current  –  total |  |  | 1,337 |  |  | 1,296
Deferred  –  domestic |  |  | — |  |  | —
Income tax benefit |  | $ | 1,337 |  | $ | 1,296
The Company has incurred a taxable loss in each of the operating periods since incorporation. The income tax credits of $1.3 million and $1.3 million for the years ended December 31, 2018 and 2019, respectively, represent UK research and development, or R&D tax credits for expenditures in the United Kingdom that are refundable. A reconciliation of the (benefit) provision for income taxes from continuing operations with the amount computed by applying the statutory federal tax rate to loss from continuing operations before income taxes is as follows (in thousands):
|  | Year Ended December 31,
|  | 2018 |  | 2019
Loss from continuing operations before taxes |  | $ | (8,625) |  | $ | (9,126)
Income tax expense computed at statutory federal tax rate |  |  | (1,811) |  |  | (1,916)
Disallowed expenses and non-taxable income |  |  | 310 |  |  | 345
Loss surrendered to generate R&D credit |  |  | 1,519 |  |  | 1,686
Additional research and development tax relief |  |  | (1,342) |  |  | (1,299)
Change in valuation allowance |  |  | (7,440) |  |  | 665
Foreign items, including change in tax rates, and other |  |  | (1,700) |  |  | 176
Change in US Tax Rate |  |  | — |  |  | —
Section 382 Limitation |  |  | 9,985 |  |  | —
Other foreign items |  |  | (858) |  |  | (953)
|  | $ | (1,337) |  | $ | (1,296)
In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, or SAB 118, which addresses how a company recognizes provisional amounts when a company does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the effect of the changes in the Act. SAB 118 provides for a measurement period that should not extend beyond one year from the Act enactment date for companies to complete the accounting under Accounting Standards Codification Topic 740, Income Taxes, or ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate to be included in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provision of the tax laws that were in effect immediately before the enactment of the Act. Based on our analysis of the Tax Act, the Company made reasonable estimates of its 2017 impact. As a result of the federal corporate tax rate reduction from 35% to 21%, we re-measured certain deferred tax assets and liabilities, which resulted in a reduction in our DTA of approximately $4.4 million that was offset by a decrease in our valuation allowance. No adjustments were made as a result of the Tax Act for the year ended December 31, 2018. Significant components of the Company’s deferred tax assets are shown below (in thousands):
|  | Year Ended December 31,
|  | 2018 |  | 2019
Net operating loss and tax credit carryforwards |  | $ | 33,835 |  | $ | 35,772
Depreciation, amortization and impairment of property and equipment |  |  | 109 |  |  | 104
Stock options |  |  | 1,482 |  |  | 1,481
Research and development credits |  |  | — |  |  | —
Right of use asset |  |  | — |  |  | (163)
Lease liability |  |  | — |  |  | 176
Other |  |  | — |  |  | —
Deferred tax assets |  |  | 35,426 |  |  | 37,370
Valuation allowance for deferred tax assets |  |  | (35,426) |  |  | (37,370)
Net deferred tax assets |  | $ | — |  | $ | —
A valuation allowance has been established, as realization of such assets is uncertain. The Company’s management evaluated the positive and negative evidence bearing upon the realizability of its deferred assets, and has determined that, at present, the Company may not be able to recognize the benefits of the deferred tax assets under the more likely than not criteria. Accordingly, a valuation allowance of approximately $37.4 million has been established at December 31, 2019. The valuation allowance has increased by approximately $1.9 million in 2019. As specified in the Tax Reform Act of 1986, due to ownership changes, the Company’s ability to utilize its net operating loss, or NOL carryforwards may be limited. Utilization of the NOLs may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986 due to ownership change limitations that have occurred previously or that could occur in the future. These ownership changes may limit the amount of NOL and R&D credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. The Company completed a Section 382 study and has concluded that an ownership changed occurred on March 4, 2015 and July 21, 2017. As a result of the ownership changes, the NOLs are limited. As of December 31, 2018 and 2019, the Company had federal NOLs of $0.0 million and $0.4 million, respectively. The federal NOLs have an indefinite life. The Company has state NOLs of  $19.8 million which will begin to expire in 2028. As of December 31, 2018 and 2019, the Company had foreign NOLs of $191.2 million and $201.7 million, respectively. The Company’s foreign NOL’s do not expire under UK tax law however the use of these NOLs is restricted to an annual £5 million allowance in each standalone company or group and above this allowance, there will be a 50% restriction in the profits that can be covered by losses brought forward. Management has evaluated all significant tax positions at December 31, 2018 and 2019 and concluded that there are no material uncertain tax positions. The Company would recognize both interest and penalties related to unrecognized benefits in income tax expense. The Company has not recorded any interest and penalties on any unrecognized tax benefits since its inception. Tax years 2016, 2017 and 2018 remain open to examination by major taxing jurisdictions to which the Company is subject, which are primarily in the United Kingdom and the United States, as carryforward attributes generated in years past may still be adjusted upon examination by the United Kingdom’s H.M. Revenue & Customs, the Internal Revenue Service, or IRS or state tax authorities. The Company is not currently under examination by the IRS or any other jurisdictions for any tax years. We have not provided a deferred tax liability on the cumulative amount of unremitted foreign earnings of international subsidiaries because it is our intent to permanently reinvest such earnings outside of the United States. The Company has an aggregate deficit in foreign earnings and therefore has not provided any deferred tax liability on its outside book-tax basis difference in its foreign subsidiaries and because it is also our intent to permanently reinvest any earnings outside of the United States. We would recognize this deferred tax liability if we were to experience a change in circumstances producing a change in that intention. As a result of the repeal of the Section 902 foreign tax credit under the Tax Act, future distributions would not be offset by a foreign tax credit.

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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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