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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2020
Income Taxes |
Income Taxes | 7. Income taxes Components of income taxes consist of the following:
|  | Year ended December 31, |
|  | 2020 |  | 2019 |  | 2018 |
Foreign |  | $ | (27,215,385) |  | $ | (25,268,373) |  | $ | (15,713,032) |
Domestic |  |  | (26,263,427) |  |  | (2,791,434) |  |  | 184,763 |
Net loss |  | $ | (53,478,812) |  | $ | (28,059,807) |  | $ | (15,528,269) |
A reconciliation of the effect of applying the federal statutory rate to the net loss and the effective income tax rate:
|  | Year ended December 31, |
|  | 2020 |  | 2019 |  | 2018 |
Statutory federal income tax rate |  | 21.0 | % | 21.0 | % | 21.0 | %
Earnings in jurisdictions taxed at rates different from the statutory U.S. federal tax rate |  | 0.2 | % | 0.4 | % | 1.0 | %
Permanent differences |  | 1.7 | % | 3.7 | % | 0.4 | %
Changes in valuation allowance |  | (22.5) | % | (25.1) | % | (16.7) | %
Rate change due to TCJA |  | — | % | — | % | — | %
Rate change due to Swedish tax reform |  | — | % | — | % | (5.7) | %
Other |  | (0.4) | % | — | % | — | %
Effective income tax rate |  | — | % | — | % | — | %
Significant components of the Company’s deferred taxes as of December 31, 2020 and 2019 are as follows:
|  | December 31,
|  | 2020 |  | 2019
Deferred tax assets: |  |  |  |  |  |
Net operating loss carryforward |  | $ | 32,183,004 |  | $ | 20,536,344
Intangible assets |  |  | — |  |  | 26,842
Stock compensation |  |  | 1,358,554 |  |  | —
Accrued expenses |  |  | — |  |  | 17,779
Lease liability |  |  | 70,192 |  |  | 128,337
Gross deferred tax assets |  |  | 33,611,750 |  |  | 20,709,302
Valuation allowance |  |  | (33,541,533) |  |  | (19,676,794)
Total deferred tax assets |  |  | 70,217 |  |  | 1,032,508
Deferred tax liabilities: |  |  |  |  |  |
Fixed assets |  |  | (1,130) |  |  | (1,692)
Stock compensation |  |  | — |  |  | (908,322)
Right of use asset |  |  | (69,087) |  |  | (122,494)
Total deferred tax liabilities |  |  | (70,217) |  |  | (1,032,508)
Net deferred tax assets (liabilities) |  | $ | — |  | $ | —
The Company has no income tax expense due to operating losses incurred for the years ended December 31, 2020, 2019 and 2018, respectively. The Company has provided a valuation allowance for the full amount of the net deferred tax assets as, based on all available evidence, it is considered more likely than not that all the recorded deferred tax assets will not be realized in a future period. At December 31, 2020, the Company has $118.0 million, $28.9 million, and $28.6 million of foreign, federal and state net operating loss carryforwards, respectively, that expire at various dates through 2036. Certain of these foreign, federal and state net operating loss carryforwards may be subject to Internal Revenue Code Section 382 or similar provisions, which impose limitations on their utilization. The valuation allowance increased in 2020 and 2019 by $13.9 million and $7.0 million, respectively due to the increase in the deferred tax assets by the same amounts; primarily due to net operating loss carryforwards. Realization of the future tax benefits is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carryforward period. Under the provisions of the U.S. Internal Revenue Code and Sweden tax law, certain substantial changes in the Company’s ownership, including a sale of the Company or significant changes in ownership due to sales of equity, may have limited, or may limit in the future, the amount of net operating loss carryforwards that could be used annually to offset future taxable income. For U.S. and Swedish income tax purposes, the Company has not completed a study to assess whether a change of control has occurred or whether there have been changes of control since the Company’s formation due to the complexity and cost associated with such study and because there could be additional changes in control in the future. As a result, the Company is not able to estimate the effect of the change in control, if any, on the Company’s ability to utilize U.S. or Swedish net operating losses or other tax attribute carryforwards in the future. For Swedish income tax purposes, the Company’s net operating losses may be subject to limitations in accordance with the country’s group contribution restriction laws. The Company files tax returns in Sweden, the United States and Massachusetts, and all tax years since inception remain open to examination by the major taxing jurisdictions to which the Company is subject, as carryforward attributes generated in years past may still be adjusted upon examination by the Internal Revenue Service (IRS) or other authorities if they have or will be used in a future period. The Company is not currently under examination by the IRS or any other jurisdictions for any tax years. In June 2018, Sweden promulgated changes to the Swedish regulations on corporate income taxation. The law will apply from January 1, 2019. Among other things, the changes decrease the corporate income tax rate in two steps from 22% to 21.4% as of January 1, 2019 and 20.6% as of January 1, 2020. U.S. GAAP requires companies to revalue their deferred tax assets and deferred tax liabilities as of the date of enactment, with the resulting tax effects accounted for in the reporting period of enactment. This revaluation resulted in an overall reduction of deferred taxes of $0.7 million and a corresponding reduction in the valuation allowance. As such, there was no net impact to the Company’s statement of operations as a result of the reduction in tax rates. As tax law is complex and often subject to varied interpretations, it is uncertain whether some of the Company’s tax positions will be sustained upon examination. Tax liabilities associated with uncertain tax positions represent unrecognized tax benefits, which arise when the estimated benefit recorded in the Company’s financial statements differs from the amounts taken or expected to be taken in a tax return because of the uncertainties described above. If recognized, the Company’s uncertain tax positions would all be absorbed by net operating losses. As of December 31, 2020, the Company had approximately $0.8 million of liabilities related to uncertain tax positions. The Company had no uncertain tax positions as of December 31, 2019. As the Company’s uncertain tax positions can be offset by available net operating losses, the Company did not recognize interest and penalties for 2020, 2019 and 2018. On March 27, 2020, the U.S government enacted the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) under which several restrictions for income tax purposes were relaxed, including with respect to, the limitations on business interest expense deductions, the ability to use net operating losses, and the acceleration of alternative minimum tax credits. Given the Company’s history of losses, the CARES Act did not have a material impact on income taxes.

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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