Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Note 13 — Income Taxes

Income tax (benefit) expense for respective periods noted is as follows:

	Year Ended December 31,
	2020			2019
Current
Federal, State and Local	$	—		$	—
Deferred
Federal		(4,571	)		(3,342	)
State and Local		(4,147	)		(4,808	)
		(8,718	)		(8,150	)
Less: Valuation allowance reserve		8,718			8,150
	$	—		$	—

The reconciliation of the federal statutory income tax rate to the effective income tax rate for the respective period noted is as follows:

	Year Ended December 31,
	2020			2019
U.S. federal statutory rate		21.0	%		21.0	%
U.S. state and local income taxes, net of federal benefit		9.9	%		14.2	%
Permanent differences		(5.8	)%		(3.5	)%
Other		(0.8	)%		15.5	%
Valuation allowance		(24.3	)%		(47.2	)%
Effective tax rate		—	%		—	%

The tax effects of temporary differences which give rise to the net deferred tax assets for the respective period noted is as follows:

	Year Ended December 31,
	2020			2019
Deferred Tax Assets
Net operating loss	$	21,836		$	14,060
Non-deductible interest expense		517			357
Debt issue costs		205			285
Stock-based compensation expense		1,901			1,213
Patent licenses		14			14
Research and development tax credit carryforwards		396			396
Accrued expenses		552			371
Section 195 deferred start-up costs		24			28
Deferred tax assets	$	25,445		$	16,724
Deferred Tax Liabilities
Depreciation		(19	)		(16	)
Deferred Tax Liabilities	$	(19	)	$	(16	)
Deferred tax assets, net of deferred tax liabilities		25,426			16,708
Less: valuation allowance		(25,426	)		(16,708	)
Deferred tax assets, net after valuation allowance	$	—		$	—

Deferred tax assets and deferred tax liabilities resulting from temporary differences are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of the change in the tax rate is recognized as income or expense in the period the change in tax rate is enacted.

As required by FASB ASC Topic 740, Income Taxes, (“ASC 740), a “more-likely-than-not” criterion is applied when assessing the estimated realization of deferred tax assets through their utilization to reduce future taxable income, or with respect to a deferred tax asset for tax credit carryforward, to reduce future tax expense. A valuation allowance is established, when necessary, to reduce deferred tax assets, net of deferred tax liabilities, when the assessment indicates it is more-likely-than-not, the full or partial amount of the net deferred tax asset will not be realized. Accordingly, the Company evaluated the positive and negative evidence bearing upon the estimated realizability of the net deferred tax assets, and based on the Company’s history of operating losses, concluded it is more-likely-than-not the deferred tax assets will not be realized, and therefore recognized a valuation allowance reserve equal to the full amount of the deferred tax assets, net of deferred tax liabilities, as of December 31, 2020 and 2019.

The Company has total estimated federal and state net operating loss (“NOL”) carryforward of approximately $63 million and $40.0 million as of December 31, 2020 and 2019, respectively, which is available to reduce future taxable income, of which approximately $13.8 million have statutory expiration dates commencing in 2035, and approximately $49.2 million which do not have a statutory expiration date. The Company has not yet conducted a formal analysis and the NOL carryforward may be subject-to limitation under U.S. Internal Revenue Code (“IRC”) Section 382 (provided there was a greater than 50% ownership change, as computed under such IRC Section 382). The State and Local NOL carryforwards of approximately $63.0 million have statutory expiration dates commencing in 2035. The Company has total estimated research and development (“R&D”) tax credit carryforward of approximately $0.4 million as of December 31, 2020 which are available to reduce future tax expense and have statutory expiration dates commencing in 2035.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the pandemic resulting from the outbreak of a novel strain of a coronavirus designated as the “Severe Acute Respiratory Syndrome Coronavirus 2” - or “SARS-CoV-2”. The pandemic resulting from SARS-CoV-2 is commonly referred to by its resulting illness of “coronavirus disease-2019” (“COVID-19”), and is referred to herein as the COVID-19 pandemic.

Among other provisions, the CARES Act increases the limitation on the allowed business interest expense deduction from 30 percent to 50 percent of adjusted taxable income for tax years beginning January 1, 2019 and 2020 and allows businesses to immediately expense the full cost of Qualified Improvement Property, retroactive to tax years beginning on or after January 1, 2018. Additionally, the CARES Act permits net operating loss carryovers (“NOLs”) and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. While the Company is currently evaluating the impact of these CARES Act provisions, it is not expected, at this time, to have a material impact on the consolidated income tax provision.

The Company files income tax returns in the United States in federal and applicable state and local jurisdictions. The Company’s tax filings for the years 2017 and thereafter each remain subject to examination by taxing authorities. The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision. The Company has not recognized any penalties or interest related to its income tax provision.