INCOME TAXES

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 4 – INCOME TAXES

The reconciliation of income tax expense computed at the U.S. federal statutory rate to the income tax provision for the years ended December 31, 2020 and 2019 is as follows (in thousands):

	Year Ended December 31
US	2020			2019
Income before income taxes	$	(5,902	)	$	(2,508	)
Taxes under statutory US tax rates		(1,239	)		(527	)
Increase (decrease) in taxes resulting from:
Increase (decrease) in valuation allowance		731			529
All other		707			72
State taxes		(199	)		(74	)
Income tax expense	$	-		$	-

The increase in the Company's net increase in the valuation allowance was caused by continued net operating losses from ongoing operations.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities consist of the following (in thousands):

	December 31,
	2020			2019
US
Net operating loss	$	9,230		$	8,545
Share based compensation		782			725
Reserves and accruals		(9	)		2
Gross deferred tax assets	$	10,003		$	9,272
Less valuation allowance		(10,003	)		(9,272	)
Total deferred tax assets	$	-		$	-
Deferred tax liabilities:
Total deferred tax liabilities		-			-
Net deferred tax assets / (liabilities)	$	-		$	-

As of December 31, 2020, the Company had federal and state net operating loss carry forwards of $40.3 million and $14.4 million, respectively that may be offset against future taxable income, subject to limitation under Internal Revenue Code of 1986, as amended (“IRC”) Section 382, which begin to expire in 2021.  No tax benefit has been reported in the December 31, 2020 due to the uncertainty surrounding the realizability of the benefit, based on a more likely than not criteria and in consideration of available positive and negative evidence.

Utilization of the net operating losses (NOL) carryforwards may be subject to a substantial annual limitation due to ownership change limitations that may have occurred or that could occur in the future, as required by Section 382 of the IRC, as well as similar state provisions. These ownership changes may limit the amount of NOL carryforwards that can be utilized annually to offset future taxable income. In general, an “ownership change” as defined by Section 382 of the IRC results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders. At the time of closing the books, the Company had not yet completed a study to determine the extent of the limitation.

The Company applied the "more-likely-than-not" recognition threshold to all tax positions taken or expected to be taken in a tax return, which resulted in no unrecognized tax benefits as of December 31, 2020 and December 31, 2019, respectively.

The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest and penalties on the balance sheets and has not recognized interest and/or penalties in the Statements of Operations loss for the years ended December 31, 2020 and 2019.

The Company is subject to taxation in the United States and various state jurisdictions. The Company’s tax years from inception are subject to examination by the United States and state taxing authorities due to the carryforward of unutilized NOLs.

There are no taxes payable as of December 31, 2020 or December 31, 2019.