Income Taxes
At December 31, 2017, Synergy has net operating loss carry forwards (“NOLs”) aggregating approximately $733.6 million, which, if not used, expire beginning in 2018 through 2037. The utilization of these NOLs is subject to limitations based on past and future changes in ownership of Synergy pursuant to Internal Revenue Code Section 382. The Company has determined that ownership changes have occurred for Internal Revenue Code Section 382 purposes and therefore, the ability of the Company to utilize its NOLs is limited. The Company has no other material deferred tax items. Based upon our analysis, we believe it is more likely than not that the net deferred tax assets will not be realized in the future. Accordingly, a full valuation allowance on the net deferred tax assets has been recorded. Synergy records a valuation allowance against deferred tax assets to the extent that it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. As a result of this valuation allowance there are no income tax benefits reflected in the accompanying consolidated statements of operations to offset pre-tax losses.
The provisions of FASB ASC Topic 740-10-30-7, Accounting for Income Taxes were adopted by Synergy on January 1, 2007 and had no effect on Synergy’s financial position, cash flows or results of operations upon adoption, as Synergy did not have any unrecognized tax benefits. Synergy’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense, and none have been incurred to date. Synergy has no uncertain tax positions subject to examination by the relevant tax authorities as of December 31, 2017 and December 31, 2016. Synergy files U.S. and state income tax returns in jurisdictions with varying statutes of limitations. The 2012 through 2016 tax years generally remain subject to examination by federal and most state tax authorities. The Internal Revenue Service is currently auditing the 2013 and 2015 tax years. So far, there are no changes to the returns. There are no on-going state tax audits but the 2012 through 2016 tax years remain subject to examination by most state authorities.
Synergy periodically files for and receives certain state and local research and development tax credits. As of December 31, 2017 the Company had no outstanding refundable tax credits due. During the year ended December 31, 2016 Synergy reported $121,000 income from R&D tax credits in the Company’s statement of operations and none during the year ended December 31, 2015.