Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

v3.20.4
Income Taxes (Tables)
12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Schedule of Domestic and Foreign Components of Income (Loss) Before Income Tax Expense (Benefit)

The following table presents domestic and foreign components of income (loss) before income tax expense (benefit) for the years ended December 31, 2020 and 2019 (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

Domestic

 

$

(19,536

)

 

$

(7,857

)

Foreign

 

 

(9,550

)

 

 

4,618

 

Loss before income tax expense (benefit)

 

$

(29,086

)

 

$

(3,239

)

Schedule of Provision for Federal and State Income Taxes

 

The provision for federal and state income taxes consists of the following (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

Current

 

 

 

 

 

 

 

 

Domestic:

 

 

 

 

 

 

 

 

US federal corporate income tax

 

$

 

 

$

 

US state corporate income tax

 

 

1

 

 

 

 

Foreign:

 

 

 

 

 

 

 

 

IRES (Italian corporate income tax)

 

 

305

 

 

 

66

 

IRAP (Italian regional tax on productive activities)

 

 

165

 

 

 

50

 

Foreign (India)

 

 

 

 

 

1,977

 

Other Italian taxes

 

 

 

 

 

194

 

Current

 

 

471

 

 

 

2,287

 

Deferred

 

 

(2,747

)

 

 

(14

)

Income tax expense (benefit)

 

$

(2,276

)

 

$

2,273

 

Schedule of Reconciliation of the Statutory Effective Tax Rate

The differences between income taxes expected by applying the U.S. federal statutory tax rate of 21% and the amount of income taxes provided for are as follows (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

Loss before income tax expense (benefit)

 

$

(29,086

)

 

$

(3,239

)

Primary tax rate of the Company (1)

 

 

21.00

%

 

 

21.00

%

Tax benefit calculated according to the Company's primary tax rate

 

 

(6,097

)

 

 

(680

)

State income tax, net of Federal

 

 

(1,188

)

 

 

(483

)

Foreign tax rates differences (2)

 

 

(750

)

 

 

319

 

Change in applicable tax rates

 

 

 

 

 

(513

)

Change in valuation allowance

 

 

7,435

 

 

 

2,027

 

Non-taxable income

 

 

 

 

 

(196

)

Costs not deductible for tax purposes

 

 

 

 

 

541

 

Costs not deductible associated with investments

 

 

 

 

 

36

 

CFC (Controlled Foreign Corporation rules) (3)

 

 

 

 

 

288

 

IRAP (Italian Regional Tax on Productive Activities)

 

 

 

 

 

4

 

Taxes on undistributed profits

 

 

144

 

 

 

926

 

Stock based compensation

 

 

(1,820

)

 

 

 

Other taxes

 

 

 

 

 

4

 

Reported income tax expense (benefit)

 

$

(2,276

)

 

$

2,273

 

 

 

(1)

For the years ended December 31, 2020 and 2019, “primary tax rate of the Company” means the U.S. federal tax rate (21%).

 

(2)

For the years ended December 31, 2020 and 2019, “foreign” relates to tax jurisdictions outside the United States.

 

(3)

Recorded by the Company in relation with the Dubai subsidiary.

Components of Deferred Tax Assets and Liabilities

The following table presents the significant components of the Company’s deferred tax assets and liabilities (in thousands):

 

 

 

As of December 31,

 

 

 

2020

 

 

2019

 

Deferred tax assets:

 

 

 

 

 

 

 

 

Startup costs

 

$

2,918

 

 

$

2,755

 

Deferred compensation liabilities

 

 

3,557

 

 

 

398

 

Property and equipment

 

 

 

 

 

70

 

Goodwill

 

 

100

 

 

 

119

 

Net operating loss carryforward

 

 

9,420

 

 

 

3,370

 

Other

 

 

578

 

 

 

422

 

Total deferred tax assets

 

 

16,573

 

 

 

7,134

 

Less: valuation allowance

 

 

(12,923

)

 

 

(5,591

)

Total deferred tax assets, net

 

 

3,650

 

 

 

1,543

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Intangible assets

 

 

1,891

 

 

 

2,351

 

Undistributed profits

 

 

1,033

 

 

 

1,093

 

Property and equipment

 

 

23

 

 

 

134

 

Other

 

 

 

 

 

10

 

Total deferred tax liabilities

 

 

2,947

 

 

 

3,588

 

Net deferred tax assets (liabilities)

 

$

703

 

 

$

(2,045

)

Summary of Valuation Allowance

The following table sets forth activity in the valuation allowance for the year ended December 31, 2020 and 2019 (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

Balance at the beginning of the period

 

$

5,591

 

 

$

723

 

Change in scope of consolidation

 

 

4,707

 

 

 

2,836

 

Increase during the period

 

 

2,625

 

 

 

2,027

 

Effect of exchange rate changes

 

 

 

 

 

5

 

Balance at the end of the period

 

$

12,923

 

 

$

5,591

 

Summary of Gross Unrecognized Tax Benefits

A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits as of December 31, 2020 and 2019 is as follows (in thousands):

 

 

 

As of December 31,

 

 

 

2020

 

 

2019

 

Gross unrecognized tax benefits, beginning of the year

 

$

468

 

 

$

190

 

Additions for tax positions of prior years

 

 

 

 

 

 

Additions for tax positions related to the current year

 

 

88

 

 

 

193

 

Change in scope of consolidation

 

 

 

 

 

 

Reductions due to settlements

 

 

 

 

 

 

Effect of exchange rate

 

 

14

 

 

 

(6

)

Subtotal

 

 

570

 

 

 

377

 

Interest and penalties

 

 

60

 

 

 

91

 

Total gross unrecognized tax benefits, end of the year

 

$

630

 

 

$

468