Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.20.4
Income Taxes
12 Months Ended
Dec. 31, 2020
Income Taxes  
Income Taxes

Note 10 — Income Taxes

The Company files U.S. federal and various state and foreign tax returns.

Pre-tax earnings consisted of the following for the years ended:

December 31, 

December 31, 

December 31, 

    

2020

    

2019

    

2018

Pre-Tax Income (Loss)

 

  

 

  

 

  

U.S.

$

(18,238,773)

$

(26,482,033)

$

(22,082,137)

Outside the U.S.

 

286,601

 

5,663

 

206,424

Total Pre-Tax Income (Loss)

$

(17,952,172)

$

(26,476,370)

$

(21,875,713)

The provision expense/(benefit) for income taxes for the years ended December 31, 2020, 2019 and 2018 was as follows:

    

2020

    

2019

    

2018

U.S. Income Taxes:

 

  

 

  

 

  

Current Provision

$

$

$

Deferred Provision

 

(3,897,293)

 

(5,382,746)

 

(4,848,470)

Valuation Allowance

 

3,897,293

 

5,382,746

 

4,848,470

Income Taxes Outside the U.S.:

 

 

 

  

Current Provision

 

 

 

Deferred Provision

 

7,916

 

(511,672)

 

41,285

Valuation Allowance

 

(7,916)

 

511,672

 

(41,285)

State Income Taxes:

 

  

 

  

 

  

Current Provision

 

 

 

Deferred Provision

 

(94,324)

 

(189,200)

 

(140,933)

Valuation Allowance

 

94,324

 

189,200

 

140,933

Total Provision

$

$

$

A reconciliation of the statutory U.S. federal income tax rate to the effective rates for the years ended December 31, 2020, 2019 and 2018 is as follows:

    

2020

    

2019

    

2018

%  

%  

%

Federal Income Tax at Statutory Rate

 

21.0

 

21.0

 

21.0

State Tax Provision, Net of Federal Benefit

 

0.3

 

0.3

 

0.3

Permanent Differences

 

(0.4)

 

(0.1)

 

(1.5)

Forgiveness of PPP Loan

1.8

Federal Tax Credits

 

1.1

 

1.3

 

2.5

Stock Compensation

(2.0)

(1.9)

Foreign Tax Provision

0.3

1.9

Other

 

0.1

 

0.5

 

0.3

Effective Tax Rate

 

22.2

 

23.0

 

22.6

Change in Valuation Allowance

 

(22.2)

 

(23.0)

 

(22.6)

Net Effective Tax Rate

 

 

 

Significant components of the Company’s deferred tax assets and liabilities at year end are as follows:

December 31, 

December 31, 

December 31, 

    

2020

    

2019

    

2018

Deferred Tax Assets:

 

  

 

  

 

  

Net Operating Loss Carry-forwards

$

29,264,829

$

25,678,591

$

20,920,285

Tax Credit Carry-forwards

 

3,778,001

 

3,535,863

 

3,035,384

Inventory Valuation Adjustment

 

847,441

 

982,160

 

104,450

Stock-Based Compensation

 

208,803

 

 

175,753

Lease Obligation Liability

323,186

446,488

Other

 

368,243

 

263,348

 

207,327

Total Deferred Tax Assets

 

34,790,503

 

30,906,450

 

24,443,199

Deferred Tax Liabilities:

 

  

 

  

 

  

Income from Foreign Operations

 

10,727

 

 

59,123

Lease Right of Use Asset

323,186

446,488

Other

 

27,262

 

14,335

 

22,069

Total Deferred Tax Liabilities

 

361,175

 

460,823

 

81,192

Net Deferred Tax Assets Before Valuation Allowance

$

34,429,328

$

30,445,627

$

24,362,007

Valuation Allowance

 

(34,429,328)

 

(30,445,627)

 

(24,362,007)

Net Deferred Tax Assets

$

$

$

In response to the COVID-19 pandemic, many governments have enacted or are contemplating measures to provide aid and economic stimulus. These measures may include deferring the due dates of tax payments or other changes to their income and non-income-based tax laws. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020 in the U.S., includes measures to assist companies, including temporary changes to income and non-income-based tax laws. The Company has assessed the provisions of the CARES Act and determined that there were no material tax impacts to the consolidated financial statements for the year ended December 31, 2020.

As of December 31, 2020, the Company has approximately $135 million in US federal net operating loss (NOL) carry-forwards and $1.5 million of Japanese NOL carryforwards. The federal NOL carryforwards generated in tax years prior to 2018 will begin to expire in 2021. The federal NOL carryforwards generated in tax years after 2017 have no expiration. The Company has state NOL carryforwards of approximately $5.4 million available in various jurisdictions in which it files that will begin to expire in 2034. The Company also has approximately $3.8 million of federal and state credit carry-forwards. The federal and state credit carryforwards began to expire in 2021. Utilization of the NOL and credit carryforwards may be subject to an annual limitation in the case of sufficient equity ownership changes under Section 382 of the tax law or the carryforwards may expire unutilized.

As the result of the assessment of the FASB ASC 740-10 (Prior Authoritative Literature: FASB Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109), the Company has no unrecognized tax benefits.

The Company’s U.S. federal and state tax returns for the years 2017 through 2020 remain subject to examination by the respective tax authorities.

FASB ASC 740 (Prior Authoritative Literature: SFAS No. 109, Accounting for Income Taxes), requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differing treatment of items for financial reporting and income tax reporting purposes. The deferred tax balances are adjusted to reflect tax rates by tax jurisdiction, based on currently enacted tax laws, which will be in effect in the years in which the temporary differences are expected to reverse. In light of the historic losses of the Company, a 100% valuation allowance has been recorded to fully offset any benefit associated with the net deferred tax assets, for which realization is not considered more likely than not to occur.