NVUS 2018 Annual Report

Year Ended December 31,

2018

2017

2016

Current: Federal

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$

$

$

State

Foreign

Deferred

Federal

State

Foreign

Ͷ $

Ͷ $

Provision (benefit) for income taxes

$

The Company is subject to income taxes under U.S. tax laws. The Company was subject to an Israeli corporate tax rate of 24% in 2017. The Company is subject to an Israeli corporate tax rate of 23% in 2018 and thereafter. The Company was subject to a blended U.S. tax rate (federal as well as state corporate tax) of 35% in 2017 and is subject to a blended U.S. tax rate of 21% in 2018. On December 22, 2017, H.R. 1/Public Law No. 115- NQRZQ DV WKH 7D[ &XWV DQG -REV $FW WKH ³ Tax $FW´ ZDV signed into law. The effects of this new federal legislation are recognized upon enactment, which is the date a bill is signed into law. The Tax Act includes numerous changes in existing tax law, including a permanent reduction in the federal corporate income tax rate from 35% to 21%. The rate reduction took effect on January 1, 2018. As a result of the Tax Act, we recorded a $1.9 million reduction in our net deferred tax assets to reflect the rate reduction in the fourth quarter of 2017. However, the revaluation did not result in any additional net income tax expense as our net deferred tax assets are fully offset by a valuation allowance. The SEC staff issued Staff $FFRXQWLQJ %XOOHWLQ 1R ³6$% ´ ZKLFK SURYLGHV JXLGDQFH RQ DFFRXQWLQJ IRU WKH tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the H[WHQW WKDW D FRPSDQ\¶V DFFRXQWLQJ IRU FHUWDLQ LQFRPH WD[ HIIHFWV RI WKH Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act. As of December 22, 2018, the &RPSDQ\¶V DFFRXQWLQJ IRU WKH UHPHDVXUHPHQW RI LWV GHIHUUHG WD[ DVVHWV ZDV FRPSOHWH DQG WKHUH ZHUH QR FKDQJHV WR WKH amount previously recorded. 6LJQLILFDQW MXGJPHQW LV UHTXLUHG LQ GHWHUPLQLQJ WKH &RPSDQ\¶V SURYLVLR n for income taxes, deferred tax assets and liabilities and the valuation allowance recorded against net deferred tax assets. Deferred tax assets and liabilities are determined using the enacted tax rates in effect for the years in which those tax assets are expected to be realized. A valuation allowance is established when it is more likely than not the future realization of all or some of the deferred tax assets will not be achieved. The evaluation of the need for a valuation allowance is performed on a jurisdiction-by-jurisdiction basis, and includes a review of all available positive and negative evidence. Factors reviewed include projections of pre-tax book income for the foreseeable future, determination of cumulative pre-tax book income after permanent differences, earnings history, and reliability of forecasting. Based on its review, the Company concluded that it was more likely than not that they would not realize the benefit of its deferred tax assets in the future. This conclusion was based on historical and projected operating performance, as well as WKH &RPSDQ\¶V H[SHFWDWLRQ WKDW LWV RSHUDWLRQV ZLOO not generate sufficient taxable income in future periods to realize the tax benefits associated with the deferred tax assets within the statutory carryover periods. Therefore, the Company maintained a full valuation allowance on its deferred tax assets as of December 31, 2018 and 2017. The Company will continue to assess the need for a valuation allowance on its deferred tax assets by evaluating both positive and negative evidence that may exist. Any adjustment to the net deferred tax asset valuation allowance would be recorded in the statement of operations for the period that the adjustment is determined to be required.

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