Income Taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 7 – Income Taxes

The Company records deferred taxes in accordance with ASC 740, Accounting for Income Taxes. ASC 740 requires recognition of deferred tax assets and liabilities for temporary differences between tax basis of assets and liabilities and the amounts at which they are carried in the financial statements, based upon the enacted rates in effect for the year in which the differences are expected to reverse. The Company establishes a valuation allowance when necessary to reduce deferred tax assets to the amount expected to be realized. The Company periodically assesses the value of its deferred tax assets and determines the necessity for a valuation allowance.

Realization of the Company’s deferred tax assets is dependent upon the Company generating sufficient taxable income in the appropriate tax jurisdictions in future years to obtain benefit from the reversal of net deductible temporary differences and from utilization of net operating losses. The Company’s major tax jurisdictions are New Jersey, Colorado, California and the United Kingdom (“U.K.”). The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are changed.

As of September 30, 2022, the Company’s net deferred tax asset of $2.4 million is net of a valuation allowance of approximately $2.8 million which is associated with the Company’s state net operating loss carryforward and a state research and development credit. The net deferred tax asset decreased approximately $3.2 million from December 31, 2021 due to the reduction in federal and New Jersey net operating loss carryforwards due to the taxable gain to be recognized on the Microlab divestiture. The Company expects to utilize in 2022 all of its federal net operating loss carryforwards and approximately one-half of its New Jersey state net operating loss carryforwards to offset the taxable gain recognized on the Microlab divestiture.

In accordance with Accounting Standards Update (“ASU”) 2019-12 the Company recorded a tax benefit from continuing operations of $341,000 and $1.5 million for the three and nine months ended September 30, 2022, respectively. The Company recorded a tax provision of approximately $5.0 million related to income from discontinued operations for the nine months ended September 30, 2022. The Company recorded a tax benefit from continuing operations of $1.3 million and $1.4 million for the three and nine months ended September 30, 2021, respectively. The Company recorded a tax provision of approximately $500,000 and $1.0 million related to income from discontinued operations for the three and nine months ended September 30, 2021.