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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes

10. Income Taxes

The Company’s effective tax rates for the years ended December 31, 2021 and 2020 differ from the U.S. federal statutory rate as follows (in thousands):

 

 

 

Years Ended December 31,

 

 

 

2021

 

 

2020

 

Tax at the federal statutory rate

 

$

(18,790

)

 

$

(6,919

)

Benefit from R&D tax credits

 

 

(1,244

)

 

 

(586

)

Stock-based compensation

 

 

1,102

 

 

 

331

 

Non-deductible executive compensation

 

 

817

 

 

 

—

 

Other temporary and permanent differences

 

 

33

 

 

 

21

 

Change in valuation allowance

 

 

18,082

 

 

 

7,153

 

Total provision for income taxes

 

$

—

 

 

$

—

 

The significant components of the Company’s deferred tax assets and liabilities were as follows (in thousands):

 

 

 

Years Ended December 31,

 

 

 

2021

 

 

2020

 

Deferred tax assets:

 

 

 

 

 

 

Net operating loss carryforward

 

 

33,671

 

 

 

18,832

 

Lease liability

 

 

1,228

 

 

 

677

 

R&D tax credit carryforward

 

 

2,746

 

 

 

1,502

 

Share-based compensation

 

 

2,151

 

 

 

227

 

Other deferred tax assets

 

 

237

 

 

 

109

 

Total deferred tax assets

 

 

40,033

 

 

 

21,347

 

Deferred tax liabilities - Right of use asset

 

 

(994

)

 

 

(458

)

Valuation allowance

 

 

(39,039

)

 

 

(20,889

)

Net deferred tax assets

 

$

—

 

 

$

—

 

At December 31, 2021, the Company had net operating loss carryforwards for income tax purposes of approximately $160.3 million. If not used, $18.2 million of this carryforward will begin to expire in 2036 and $142.1 million has no expiration. At December 31, 2021, the Company also had research and development tax credits of approximately $2.7 million which will begin to expire in 2037 if left unused. The Company did not have any foreign tax provision and did not generate material net operating losses in any states with an income tax.

FASB ASC 740 requires that the tax benefit of net operating losses, temporary differences, and credit carryforwards be recorded as an asset to the extent that management assesses the realization is “more likely than not.” Realization of the future tax benefits from the net operating losses or credit carryforwards, if any, is dependent on the Company’s ability to generate sufficient taxable income within the applicable carryforward period. Because of the Company’s recent history of operating losses, the Company maintains a full valuation allowance in the amount of $39.0 million and $20.9 million for the years ended December 31, 2021 and 2020, respectively.

The Company may have already experienced one or more ownership changes. Depending on the timing of any future utilization of its carryforwards, the Company may be limited as to the amount that can be utilized each year as a result of such previous ownership changes. However, the Company does not believe such limitations will cause its carryforwards to expire unutilized.

Future changes in the Company’s stock ownership as well as other changes that may be outside the Company’s control could potentially result in further limitations on the Company’s ability to utilize its net operating loss and tax credit carryforwards.

As of December 31, 2021 and 2020, the Company did not have any liabilities for unrecognized income tax benefits associated with uncertain tax positions, including any interest and penalties.