13.

INCOME TAXES

The provision for income taxes for the years ended

December 31, 2020

and

2019

consists of the following:

	For the Years Ended Year Ended December 31,
	2020			2019
Current provision
Federal	$	—		$	—
Foreign		—			—
State		51			57
Total current provision		51			57
Deferred provision
Federal		3,464			(558	)
State		588			(453	)
Total deferred provision		4,052			(1,011	)
(Decrease) increase in deferred tax valuation allowance		(4,055	)		992
Total provision for income taxes	$	48		$	38

During the year ended

December 31, 2020

, the Company recorded an expense for income taxes of

$48,

compared to an expense for income taxes of

$38

during the year ended

December 31, 2019

The total change in the deferred tax valuation allowance was $(

4,055

)

and

$992

for the years ended

December 31, 2020

and

2019

, respectively. The changes in the deferred tax valuation allowances in

2020

and

2019

were primarily the result of partial losses of NOL's associated with taking a worthless stock deduction related to the liquidation of the Services entity. Management believes that significant uncertainty exists surrounding the recoverability of deferred tax assets. As a result, the Company recorded a valuation allowance against the remaining deferred tax assets.

The tax effects of the temporary differences and NOLs that give rise to significant portions of deferred tax assets and liabilities are as follows:

	As of Year Ended December 31,
	2020			2019
Current deferred tax assets, net of valuation allowance		—			—
Noncurrent deferred income tax assets:
Net operating loss carryforwards	$	67,673		$	67,014
Intangible assets		1,968			5,040
Accrual and reserves		3,119			2,462
Other		6			77
Total noncurrent deferred tax assets		72,766			74,593
Valuation allowance		(70,066	)		(74,121	)
Noncurrent deferred tax assets, net of valuation allowance		2,700			472
Noncurrent deferred income tax liabilities:
Fixed assets		2,700			476
Total noncurrent deferred tax liabilities		2,700			476
Net deferred income tax liability	$	—		$	(4	)

Valuation allowances of

$70,066

and

$74,121

have been provided for deferred income tax assets for which realization is uncertain as of

December 31, 2020

and

2019

, respectively. A reconciliation of the beginning and ending amounts of the valuation is as follows:

Valuation allowance as of December 31, 2019	$	(74,121	)
Gross decrease for current year activity		4,055
Valuation allowance as of Balance at December 31, 2020	$	(70,066	)

As of

December 31, 2020

, the Company had federal and unapportioned state NOL carryforwards of approximately

$260,598

of which

$227,781

will begin to expire in

2026.

The majority of the NOL carryforwards will expire in various years from

2028

through

2037.

NOLs generated after

January 1, 2018

will

not

expire.

The reconciliation between the statutory U.S. federal income tax rate and the Company's effective income tax rate is as follows:

	For the Year Ended
	December 31,
	2020			2019
Statutory U.S. federal income tax rate		21.0	%		21.0	%
State and local income taxes, net of federal income tax benefit		(8.0	)		2.0
Permanent differences		(2.6	)		(0.4	)
Change in valuation allowance		(15.9	)		(23.1	)
Other		2.7			(0.5	)
Effective income tax rate		(2.8	)%		(1.0	)%

The Company accounts for the uncertainty in income taxes by prescribing a minimum recognition threshold for a tax position taken, or expected to be taken, in a tax return that is required to be met before being recognized in the financial statements. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. As of

December 31, 2020

, the Company had

unrecognized tax benefits that could impact the income tax expense.

The Company files income tax returns in the U.S. federal and state jurisdictions. As of

December 31, 2020

, with few exceptions, the Company is

longer subject to federal or state income tax examinations by taxing authorities for years before

December 31, 2016;

however, taxing authorities have the ability to adjust NOL carryforwards in open tax years that

may

have been carried forward from closed years. The Company's

2008

and

2009

federal tax returns were examined in

2011

and

material adjustments were identified related to any of the Company's tax positions. Although these periods have been audited, they continue to remain open until all NOLs generated in those tax years have either been utilized or expire.

Section

382

of the Internal Revenue Code of

1986,

as amended (the “IRC”), generally imposes an annual limitation on the amount of NOL carryforwards and associated built-in losses that

may

be used to offset taxable income when a corporation has undergone certain changes in stock ownership. The Company's ability to utilize NOL carryforwards and built-in losses

may

be limited, under this section or otherwise, by the Company's issuance of common stock or by other changes in stock ownership. Upon completion of the Company's analysis of IRC Section

382,

the Company has determined that aggregate changes in stock ownership have resulted in an annual limitation of

$14,284

on NOLs and built-in losses available for utilization based on the triggering event in

2010.

To the extent the Company's use of NOL carryforwards and associated built-in losses is significantly limited in the future due to additional changes in stock ownership, the Company's income could be subject to U.S. corporate income tax earlier than it would if the Company were able to use NOL carryforwards and built-in losses without such annual limitation, which could result in lower profits and the loss of the majority of the benefits from these attributes.

February 2013,

the Company adopted a Stockholder Rights Plan, which was amended in

February 2016

and approved by our stockholders (as amended, the “Rights Plan”), designed to preserve the Company's substantial tax assets associated with NOL carryforwards under Section

382

of the IRC. On

February 7, 2019,

the Board of Directors (the “Board”) approved an amendment extending the Rights Plan for an additional

three

years, which was subsequently approved by the Company's stockholders at the

2019

Annual Meeting of Stockholders held on

April 23, 2019 (

the

“2019

Annual Meeting of Stockholders”).

The Rights Plan is intended to act as a deterrent to any person or group, together with its affiliates and associates, being or becoming the beneficial owner of

4.9%

or more of the Company's common stock and thereby triggering a further limitation of the Company's available NOL carryforwards. In connection with the adoption of the Rights Plan, the Board declared a non-taxable dividend of

one

preferred share purchase right (a “Right”) for each outstanding share of the Company's common stock to the Company's stockholders of record as of the close of business on

February

22,

2013.

Each Right entitles its holder to purchase from the Company

one one

-thousandth of a share of the Company's Series A Junior Participating Preferred Stock at an exercise price of

$4.25

per Right, subject to adjustment. As a result of the Rights Plan, any person or group that acquires beneficial ownership of

4.9%

or more of the Company's common stock without the approval of the Board would be subject to significant dilution in the ownership interest of that person or group. Stockholders who owned

4.9%

or more of the outstanding shares of the Company's common stock as of

February

12,

2013

will

not

trigger the preferred share purchase rights unless they acquire additional shares after that date.