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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The Company’s loss before income taxes was entirely generated from its U.S. operations. The current and deferred expense is as follows:
| Year Ended December 31,
| 2021 |  | 2020
Current provision: |  |  |
Federal | $ | — |  |  | $ | — |
State | 27 |  |  | 52 |
Total current provision | 27 |  |  | 52 |
Deferred (benefit) provision: |  |  |
Federal | 20 |  |  | — |
State | (5) |  |  | 25 |
Total deferred provision (benefit) | 15 |  |  | 25 |
Total provision (benefit) for income taxes | $ | 42 |  |  | $ | 77 |
As of December 31, 2021, the Company has federal net operating loss (“NOL”) carryforwards of $273,776, of which $72,579 will begin to expire in 2034. The federal NOLs generated in 2018 and in the subsequent years in the amount of $201,197 have an indefinite carryforward period. As of December 31, 2021, the Company has state NOL carryforwards of $169,332, which will begin to expire in 2038. As of December 31, 2021, the Company has federal research and development (“R&D”) credit carryforwards of $2,929, which will begin to expire in 2034. The Company also has California R&D credit carryforwards of $2,918, which has an indefinite carryforward period. The NOL and the R&D credit carryforwards generated by the Company in tax years ended February 11, 2018 and prior have been included in the consolidated and unitary income tax returns of Alphaeon Corporation (“Alphaeon”). After the Company left Alphaeon consolidated and unitary income tax group on February 11, 2018, the Company files its own standalone income tax returns. Deferred tax assets in the accompanying financial statements reflect the Company's standalone tax attributes that are reportable on its own income tax returns. In general, if a company experiences a greater than 50 percentage point aggregate change in ownership of certain significant stockholders over a three-year period, utilization of its pre-change NOL carryforwards and R&D credit carryforwards is subject to an annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and similar state laws. The annual limitation generally is determined by multiplying the value of the Company’s stock at the time of such ownership change, subject to certain adjustments, by the applicable long-term tax-exempt rate. The annual limitations may result in the expiration of NOL and R&D credit carryforwards before utilization and may be material. The Company has started but has not completed an analysis to determine whether its NOL and R&D credits generated through December 31, 2021 are likely to be limited by Section 382 and 383. The Company anticipates that an ownership change as defined under Section 382 may have occurred and that the resulting limitation would significantly reduce the Company’s ability to utilize its NOL and R&D credit carryforwards before they expire. Additionally, future ownership changes under Section 382 and 383 may also limit the Company's ability to fully utilize any remaining tax benefits. The Company’s net deferred income tax assets have been offset by a valuation allowance. Therefore, any resulting reduction to the Company’s NOL and R&D credit carryforwards once the analysis is complete will be offset by a corresponding reduction of the valuation allowance and there would be no impact on the Company’s balance sheet, statement of operations, or cash flows. The components of deferred tax assets and liabilities were as follows:
| As of December 31,
| 2021 |  | 2020
Deferred income tax assets: |  |  |
Net operating losses | $ | 67,039 |  |  | $ | 60,083 |
Stock compensation | 2,839 |  |  | 3,938 |
Other deferred assets | 2,617 |  |  | 2,617 |
Accrued compensation | 4,017 |  |  | 2,559 |
Operating lease liabilities | 893 |  |  | 1,114 |
Accrued legal settlement | 20,276 |  |  | 21,318 |
Other, net | 216 |  |  | 21 |
Valuation allowance | (85,527) |  |  | (78,313) |
Total deferred income tax assets | 12,370 |  |  | 13,337 |
Deferred income tax liabilities: |  |  |
Intangible amortization | (11,528) |  |  | (12,240) |
Operating lease right-of-use assets | (690) |  |  | (873) |
Fixed asset depreciation | (192) |  |  | (249) |
Total deferred income tax liabilities | (12,410) |  |  | (13,362) |
Net deferred income taxes | $ | (40) |  |  | $ | (25) |
A reconciliation of the difference between the provision (benefit) for income taxes and income taxes at the statutory U.S. federal income tax rate is as follows:
| As of December 31,
| 2021 |  | 2020
Income tax at statutory rate | $ | (9,832) |  |  | $ | (34,217) |
State income taxes, net of Federal benefit | (1,872) |  |  | (7,232) |
Revaluation of contingent royalty obligation | 1,595 |  |  | (513) |
Meals and entertainment | 230 |  |  | 366 |
Change in state tax rate | 129 |  |  | (242) |
Officers' compensation | 2,076 |  |  | 133 |
Stock compensation | (17) |  |  | 616 |
Research and development tax credit | — |  |  | (147) |
Promissory note - debt discount | 120 |  |  | (145) |
Other, net | 399 |  |  | 117 |
Valuation allowance | 7,214 |  |  | 41,341 |
Income tax provision (benefit) | $ | 42 |  |  | $ | 77 |
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| As of December 31,
| 2021 |  | 2020
Beginning balance | $ | 2,924 |  |  | $ | 2,761 |
Increases to current year tax positions | — |  |  | 163 |
Ending balance | $ | 2,924 |  |  | $ | 2,924 |
The Company has considered the amounts and probabilities of the outcomes that can be realized upon ultimate settlement with the tax authorities and determined unrecognized tax benefits primarily related to credits should be established as noted in the summary rollforward above. The Company’s effective income tax rate would not be impacted if the unrecognized tax benefits are recognized. Additional amounts in the summary rollforward could impact the Company’s effective tax rate if it did not maintain a full valuation allowance on its net deferred tax assets. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months. The Company’s policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. There were no accrued interest and penalties associated with uncertain tax positions as of December 31, 2021 and 2020. The Company’s tax returns for all years since inception are open for audit. On March 27, 2020, the United States enacted the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). The Cares Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the United States economy and fund a nationwide effort to curtail the effect of COVID-19. While the CARES Act provides sweeping tax changes in response to the COVID-19 pandemic, some of the more significant provisions which are expected to impact the Company’s financial statements include removal of certain limitations on utilization of net operating losses, increasing the loss carryback period for certain losses to five years and increasing the ability to deduct interest expense, as well as amending certain provisions of the previously enacted Tax Cuts and Jobs Act. There was no material impact on its financial position, results of operations, or cash flows related to the CARES Act. On December 27, 2020, the United States enacted the Consolidated Appropriations Act, which extended many of the benefits of the CARES Act that were scheduled to expire. The Company noted no material impacts due to the Consolidated Appropriations Act on its financial statements and related disclosures.

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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 -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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