Quarterly report pursuant to Section 13 or 15(d)

INCOME TAXES

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INCOME TAXES
 9 Months Ended
Sep. 30, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES

 

12. INCOME TAXES

 

Generally, accounting standards require companies to provide for income taxes each quarter based on their estimate of the effective tax rate for the full year. The authoritative guidance for accounting for income taxes allows use of the discrete method when it provides a better estimate of income tax expense. Due to the Company’s valuation allowance position, it is the Company’s position that the discrete method provides a more accurate estimate of income tax expense and therefore income tax expense for the current quarter has been presented using the discrete method. As the year progresses, the Company refines its estimate based on the facts and circumstances by each tax jurisdiction. The following table summarizes income tax expense on loss from continuing operations and the effective tax rate for the three- and nine-month periods ended September 30, 2022 and 2021:

 

    2022     2021     2022     2021  
    Three Months Ended     Nine Months Ended  
    September 30     September 30  
    2022     2021     2022     2021  
    (unaudited)     (unaudited)  
                         
Provision (benefit) for income tax   $ (11 )   $ (714 )   $ 24     $ (684 )
Effective income tax rate     0.9 %     35.1 %     (0.5 )%     11.4 %

 

Income tax benefit for the three months ended September 30, 2022 was primarily due to the reversal of certain credits as a result of the Pharma Solutions sale and income tax expense for the nine-month period ended September 30, 2022 was primarily due to minimum state and local taxes. The income tax benefit for both the three- and nine-month periods ended September 30, 2021 was due to the Company’s participation in the State of New Jersey’s Technology Business Tax Certificate Transfer Program (the “Program”) sponsored by The New Jersey Economic Development Authority. The Program enables approved biotechnology companies with unused net operating losses (“NOLs”) and unused research and development credits to sell these benefits for at least 80% of the value of the tax benefits to unaffiliated, profitable corporate taxpayers in the State of New Jersey. The Program is administered by The New Jersey Economic Development Authority and the New Jersey Department of the Treasury’s Division of Taxation. In July 2021, the Company completed the sale of NOLs totaling approximately $0.7 million.