NVUS 2018 Annual Report

A reconciliati RQ RI WKH 8 6 IHGHUDO VWDWXWRU\ LQFRPH WD[ UDWH WR WKH &RPSDQ\¶V HIIHFWLYH LQFRPH WD[ UDWH LV DV IROORZV

Year Ended December 31,

2018

2017

Statutory Federal income tax rate

$

(2,953) $

(4,460)

State income taxes, net of Federal tax benefits

Ͷ Ͷ

Ͷ

Foreign losses

59

Tax credits

(204)

(2)

Change in statutory rates Stock-based compensation

Ͷ 72

1,859

135 693 43

Permanent items

3

Other

90

Change in valuation allowance Total provision for income taxes

2,992

1,673

Ͷ $

Ͷ

$

6LJQLILFDQW FRPSRQHQWV RI WKH &RPSDQ\¶V deferred tax assets and liabilities as of December 31, 2018 and 2017 consisted of the following (in thousands):

Year Ended December 31,

2018

2017

Net operating loss carryforwards Research and development tax credits

$

7,126 $ 4,516

299 159 301 126

95 221 48 139

Accruals and reserves Stock compensation

Depreciation and amortization Total deferred tax assets Less: Valuation allowance Net deferred tax assets

8,011

5,019

(8,011)

(5,019)

Ͷ $ Ͷ

$

The following table reconciles the beginning and ending amounts of unrecognized tax benefits for the years presented (in thousands):

Year Ended December 31,

2018

2017

Gross unrecognized tax benefits at the beginning of the year $

Ͷ

181 $

Additions from tax positions taken in the current year Additions from tax positions taken in prior years Reductions from tax positions taken in prior years

158

75 106

Ͷ

Ͷ Ͷ

(11)

Tax settlements

Ͷ

Gross unrecognized tax benefits at the end of the year

$

328 $

181

The deferred income tax assets have been fully offset by a valuation allowance, as realization is dependent on future earnings, if any, the timing and amount of which are uncertain. The net valuation allowance increased by $3.0 million. 7KH &RPSDQ\¶V DFFRXQWLQJ IRU GHIHUUHG WD[HV LQYROYHV WKH HYDOXDWLRQ RI D QXPEHU RI IDFWRUV FRQFHUQLQJ WKH realizability of its net deferred tax assets. The Company primarily considered such factors as its history of operating losses, WKH QDWXUH RI WKH &RPSDQ\¶V GHIHUUHG WD[ DVVHWV DQG WKH WLPLQJ OLNHOLKRRG DQG DPRXQW LI DQ\ RI IXWXUH WD[DEOH LQFRPH during the periods in which those temporary differences and carryforwards become deductible. At present, the Company does not believe that it is more likely than not that the deferred tax assets will be realized; accordingly, a full valuation allowance has been established and no deferred tax asset is shown in the accompanying balance sheets. As of December 31, 2018, and December 31, 2017, the Company had federal net operating loss carryforwards of approximately $25.0 million and $12.5 million, respectively, available to reduce future taxable income. As of December 31,

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