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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The following table presents the components of net loss before income taxes (in thousands):
| For the Years Ended December 31,
| 2023 |  | 2022
United States | $ | (59,713) |  |  | $ | (51,437) |
Non-U.S. | — |  |  | — |
Loss before provision for income taxes | $ | (59,713) |  |  | $ | (51,437) |
The provision for income taxes included in the consolidated statement of operations is comprised of the following (in thousands):
| For the Years Ended December 31,
| 2023 |  | 2022
Current |  |  |
Federal | $ | — |  |  | $ | — |
State | — |  |  | (1) |
Non-U.S. | — |  |  | — |
Total current | — |  |  | (1) |
Deferred: |  |  |
Federal | — |  |  | (38) |
State | — |  |  | — |
Non-U.S. | — |  |  | — |
Total deferred | $ | — |  |  | $ | (38) |
Total provision | $ | — |  |  | $ | (39) |
The following table presents a reconciliation of the statutory federal rate and the Company’s effective tax rate, using a federal statutory rate of 21%:
| For the Years Ended December 31,
| 2023 |  | 2022
Statutory federal income (benefit) rate | (21) | % |  | (21) | %
Increase (decrease) resulting from: |  |  |
State income tax rate | (4) | % |  | (4) | %
Change in valuation allowance | 29 | % |  | 28 | %
Stock-based compensation | 2 | % |  | — | %
Tax credits | (6) | % |  | (4) | %
Fixed assets | — | % |  | 1 | %
Effective tax rate | — | % |  | — | %
Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the Company’s deferred tax assets and liabilities consisted of (in thousands):
| December 31,
| 2023 |  | 2022
Deferred tax assets: |  |  |
Net operating loss (“NOL”) carryforwards | $ | 23,111 |  |  | $ | 15,154 |
R&D credit carryforwards | 10,502 |  |  | 6,751 |
Stock-based compensation | 2,083 |  |  | 2,211 |
Research and experimental expenditures under IRC Section 174 | 14,063 |  |  | 5,062 |
Lease liability | 2,507 |  |  | 1,734 |
Disallowed interest expense | 2,767 |  |  | 1,841 |
Accruals and other | 1,064 |  |  | (222) |
| 56,097 |  |  | 32,531 |
Valuation allowance | (44,606) |  |  | (27,049) |
Total deferred tax asset | 11,491 |  |  | 5,482 |
Deferred tax liability: |  |  |
Fixed assets | (1,967) |  |  | (1,986) |
Right of use asset | (2,496) |  |  | (1,666) |
Capitalized internal-use software | (7,028) |  |  | (1,830) |
Total deferred tax liability | $ | (11,491) |  |  | $ | (5,482) |
Net deferred tax liability | $ | — |  |  | $ | — |
Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Based on evidence of Company's earnings history, the net U.S. deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased b y $17.6 million a nd $14.3 million during the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, the Company had federal and state NOL carryforwards of $91.4 million and $66.0 million, respectively. The federal NOL carryforwards consisted of $16.0 million generated before January 1, 2018, which will begin to expire in 2027 but are able to offset 100% of taxable income and $75.4 million generated after December 31, 2017 that will carryforward indefinitely but will be subject to 80% taxable income limitation beginning in tax years after December 31, 2021 as provided by the CARES Act. The Company has federal research and development (“R&D”) credit carryforwards of $8.8 million which will begin to expire in 2032 and California R&D credit carryforwards of $4.2 million which do not expire. The Company also has $0.1 million of California enterprise zone credits which will begin to expire in 2028. Utilization of some of the federal and state net operating loss and credit carryforwards are subject to annual limitations due to the “change in ownership” provisions of the Internal Revenue Code of 1986 (specifically Section 382), as amended, and similar state provisions. The Company performed a Section 382 analysis through December 31, 2022 and determined that ownership changes occurred in the year 2007, 2009 and 2012. The ownership changes identified had no significant impact on federal and state net operating losses. The annual limitations may result in the expiration of net operating losses and credits before utilization in the future. At this time, we have not finalized a Section 382 analysis through December 31, 2023 to assess whether such an ownership change has occurred that could impact these federal and state net operating losses. On August 16, 2022, the Inflation Reduction Act was enacted in the U.S. and introduced a 15% alternative minimum tax based on the financial statement income of certain large corporations (“CAMT”) and an excise tax of 1% of stock repurchases, effective January 1, 2023. The various provisions of the Inflation Reduction Act do not have a material impact on the Company’s consolidated financial statements for the year ended December 31, 2023. Uncertain Income Tax Positions The following table summarizes the activity related to the Company’s unrecognized tax benefits (in thousands):
| For the Years Ended December 31,
| 2023 |  | 2022
Balance at beginning of year | $ | 1,239 |  |  | $ | 817 |
Tax positions related to the current year: |  |  |
Additions | 649 |  |  | 442 |
Reductions | — |  |  | — |
Tax positions related to the prior year: |  |  |
Additions | 1 |  |  | — |
Reductions | — |  |  | (20) |
Balance at end of year | $ | 1,889 |  |  | $ | 1,239 |
The total amount of unrecognized tax benefits as of December 31, 2023 was $1.9 million, all related to federal and state tax jurisdictions. If recognized, none of the unrecognized tax benefits would affect the effective tax rate. The Company’s policy is to account for interest and penalties as income tax expense. As of December 31, 2023, the Company had no interest related to unrecognized tax benefits. No amounts of penalties related to unrecognized tax benefits were recognized in the provision for income taxes. The Company does not anticipate any significant change within twelve months of this reporting date. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Company is subject to U.S. federal and state income tax examination for calendar tax years beginning in 2007 due to NOLs that are being carried forward for tax purposes.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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