Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2021 and 2020 are as follows: December 31, 2021 2020 Deferred income tax assets: Accounts payable and accrued expenses $ 10,786 $ 9,899 163(j) interest limitation 10,693 6,903 Deferred revenue 159 88 Allowance for doubtful accounts 83 92 Property, plant and equipment, net 396 1,044 Intangibles 125 95 Investments 60,185 58,779 Stock-based compensation 1,612 713 Other — 59 Operating lease liabilities 2,249 2,565 Research and development tax credits 5,533 — Net operating loss carryforwards 119,486 110,536 Less: Valuation allowance (187,075) (163,719) Total deferred income tax assets 24,232 27,054 Deferred income tax liabilities: State taxes (7,867) (6,750) Intangible assets, net (15,535) (17,446) Convertible notes — (1,549) Deferred costs to obtain a customer contract (226) (351) Capitalized labor costs (344) (520) Other (361) (394) Operating lease right-of-use assets (1,674) (1,897) Total deferred income tax liabilities (26,007) (28,907) Deferred income taxes, net $ (1,775) $ (1,853) The realization of deferred income tax assets may be dependent on the Company’s ability to generate sufficient income in future years in the associated jurisdiction to which the deferred tax assets relate. The Company considers all available positive and negative evidence, including scheduled reversals of deferred income tax liabilities, projected future taxable income, tax planning strategies, and recent financial performance. Based on the review of all positive and negative evidence, including a three-year cumulative pre-tax loss, the Company concluded that except for the deferred tax liability recorded on amortization of certain goodwill due to its indefinite life and deferred tax liability in excess of deferred tax asset for certain separate state and city jurisdictions, it should record a full valuation allowance against all other net deferred income tax assets at December 31, 2021 and 2020 as none of these deferred income tax assets were more likely than not to be realized as of the balance sheet dates. However, the amount of the deferred income tax assets considered realizable may be adjusted if estimates of future taxable income during the carryforward period are increased or if objective negative evidence in the form of cumulative losses is no longer present. Based on the level of historical operating results the Company has recorded a valuation allowance of $187,075 and $163,719 as of December 31, 2021 and 2020, respectively. The change in the valuation allowance for the years ended December 31, 2021 and 2020 were increases of $23,356 and $10,366, respectively, which were mainly driven by losses from which the Company cannot benefit. The portion of the valuation allowance for deferred tax assets for which subsequently recognized tax benefits will be credited directly to contributed capital is $354. As of December 31, 2021, the Company had federal and state NOL carryforwards of $451,010 and $321,735, respectively, available to offset taxable income in tax year 2022 and thereafter. Of the $451,010 in Federal NOL carryforwards, $96,949 can be carried forward indefinitely and the remaining NOL carryforwards start to expire in 2022. Of the $321,735 in state NOL carryforwards $21,799 can be carried forward indefinitely and the remaining start to expire in 2022. NantHealth, Inc. Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts) - 128 -
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