The Company has incurred cumulative net operating losses since inception and, consequently, has not recorded any income tax expense for the years ended December 31, 2019 and 2018 due to its net operating loss position.

The reconciliation of the federal statutory income tax rate to the Company’s effective tax rate for the years ended December 31, 2019 and 2018 are as follows:

	Year Ended December 31,
	2019			2018
Tax at statutory federal rate		-21.00	%		-21.00	%
State Tax (benefit)—net of federal benefit		-0.06	%		-0.03	%
Permanent differences		0.43	%		0.68	%
Tax credits		-11.20	%		-0.76	%
Derecognition due to Sec. 382 and 383 limitations		0.00	%		-20.16	%
Change in valuation allowance		31.20	%		39.33	%
Other		0.63	%		1.94	%
Effective tax rate		0.00	%		0.00	%

Significant components of the Company’s deferred tax assets as of December 31, 2019 and 2018 consist of the following (in thousands):

	Year Ended December 31,
	2019			2018
Deferred tax assets:
Accruals and reserves	$	936		$	751
Net operating loss carry forwards		34,392			23,559
Tax credit carry forwards		9,945			3,772
Fixed and intangible assets		10			3
Valuation allowance		(45,283	)		(28,085	)
Net deferred tax assets:	$	—		$	—

Based on the available objective evidence at December 31, 2019, the Company does not believe it is more likely than not that the net deferred tax assets will be realizable. Accordingly, the Company has provided a full valuation allowance against its net deferred tax assets at December 31, 2019 and 2018.

As of December 31, 2019, after consideration of certain limitations (see below), the Company had approximately $163.8 million federal and $64.6 million state net operating loss carryforwards (“NOL”) available to reduce future taxable income which, if unused, will begin to expire in 2032 for federal and 2028 for state tax purposes. The federal net operating loss carryforward includes $80.1 million that have an indefinite life.

As of December 31, 2019, the Company also had tax credit carry forwards available to offset future tax liabilities of approximately $6.2 million for federal and $4.7 million for state. If unused, the federal credit will begin to expire in 2037 and the state tax credit does not expire.

If the Company experiences a greater than 50 percent aggregate change in ownership over a three-year period (a Section 382 ownership change), utilization of its pre-change NOL carryforwards are subject to annual limitation under Section 382 of the Internal Revenue Code (California has similar provisions). The annual limitation is determined by multiplying the value of the Company's stock at the time of such ownership change by the applicable long-term tax-exempt rate. Such limitations may result in expiration of a portion of the NOL carryforwards before utilization. The Company determined that ownership changes occurred December 31, 2007, August 20, 2015, April 13, 2017, and February 15, 2018. Approximately $80.1 million and $14.2 million of the NOLs will expire unutilized for federal and California purposes, respectively. The Company has derecognized NOL related deferred tax assets in the tax affected amounts of $16.8 million and $0.0 million for federal and California purposes, respectively.

All of the federal R&D credits could expire unutilized, whereas none of the California R&D credits are subject to expiration. Approximately $6.1 million of gross federal R&D credit-related deferred tax assets were derecognized due to the Section 383 limitation. The ability of the Company to use its remaining NOL carryforwards may be further limited if the Company experiences a Section 382 ownership change as a result of future changes in its stock ownership.

Accounting for Uncertainty in Income Taxes

The Company only recognizes tax benefits if it is more likely than not that they will be sustained upon audit by the relevant tax authority based upon their technical merits. An uncertain tax position will not be recognized if it has less than a 50% likelihood of being sustained.

The Company had approximately $1.9 million and $1.6 million of unrecognized tax benefits as of December 31, 2019 and 2018, respectively. As the Company has a full valuation allowance on its deferred tax assets, the unrecognized tax benefits have reduced the deferred tax assets and the valuation allowance in the same amount. The Company does not expect the amount of unrecognized tax benefits to materially change in the next twelve months.

A reconciliation of the beginning and ending balance of the unrecognized tax benefits is as follows (in thousands):

Beginning Balance at January 1, 2018	$	1,475
Increase/(Decrease) of unrecognized tax benefits taken in prior years		13
Increase/(Decrease) of unrecognized tax benefits related to current year		85
Ending Balance at December 31, 2018	$	1,573
Increase/(Decrease) of unrecognized tax benefits taken in prior years		45
Increase/(Decrease) of unrecognized tax benefits related to current year		253
Ending Balance at December 31, 2019	$	1,871

Interest and penalties related to unrecognized tax benefits would be included as income tax expense in the Company’s consolidated statements of operations. As of December 31, 2019 and 2018, the Company had not recognized any tax-related penalties or interest in its consolidated financial statements.

The Company files income tax returns in the United States federal, California, and New Jersey state jurisdictions. The Company is not currently under examination by income tax authorities in federal, state or other jurisdictions. As of December 31, 2019 and 2018, the Company had no uncertain tax positions which affected its financial position as its results of operations or its cash flow, and will continue to evaluate for uncertain tax positions in the future. The Company is subject to United States federal and state income tax examinations by authorities for all tax years due to accumulated net operating losses that are being carried forward for tax purposes.