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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision for income taxes consists of the following (in thousands):
|  | Year Ended December 31,
|  | 2023 |  | 2022
Current: |  |  |  |
Federal |  | $ | — |  |  | $ | — |
State |  | (33) |  |  | (24) |
Total current |  | (33) |  |  | (24) |
Deferred: |  |  |  |
Federal |  | — |  |  | 137 |
State |  | — |  |  | 169 |
Total deferred |  | — |  |  | 306 |
Income tax (expense) benefit |  | $ | (33) |  |  | $ | 282 |
The effective tax rate of our provision for income taxes differs from the federal statutory rate as follows:
|  | Year Ended December 31,
|  | 2023 |  | 2022
Federal statutory tax rate |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal tax benefits |  | 2.2 | % |  | 4.3 | %
Research and development tax credits |  | 0.1 | % |  | 1.5 | %
Stock compensation |  | (3.4) | % |  | (1.4) | %
Non-deductible expenses |  | (1.4) | % |  | (0.9) | %
Change in valuation allowance |  | (18.5) | % |  | (23.9) | %
Other |  | (0.1) | % |  | — | %
Effective tax rate |  | (0.1) | % |  | 0.6 | %
Significant components of the Company’s deferred tax assets at December 31, 2023 and 2022 are shown below (in thousands). A valuation allowance has been established as realization of the Company’s deferred tax assets has not met the more likely-than-not threshold requirement. If the Company’s judgment changes and it is determined that the Company will be able to realize these deferred tax assets, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets will be accounted for as a reduction to income tax expense.
|  | December 31,
|  | 2023 |  | 2022
Deferred tax assets: |  |  |  |
Net operating loss carryforwards |  | $ | 32,479 |  |  | $ | 29,789 |
Research and development tax credits |  | 2,353 |  |  | 2,216 |
Accruals, reserves and other |  | 1,119 |  |  | 349 |
Interest expense |  | 2,547 |  |  | 2,236 |
Indefinite lived assets |  | 300 |  |  | 362 |
Stock compensation |  | 1,391 |  |  | 1,606 |
Lease liability |  | 925 |  |  | 1,374 |
Capitalization of research and experimentation costs |  | 2,929 |  |  | 2,047 |
Total gross deferred tax assets |  | 44,043 |  |  | 39,979 |
Less: valuation allowance |  | (42,942) |  |  | (38,567) |
Deferred tax assets, net |  | 1,101 |  |  | 1,412 |
Deferred tax liabilities: |  |  |  |
Right of use assets |  | (814) |  |  | (1,206) |
Basis differences in fixed and intangible assets |  | (287) |  |  | (206) |
Deferred tax liabilities |  | (1,101) |  |  | (1,412) |
Net deferred tax assets |  | $ | — |  |  | $ | — |
Changes in the valuation allowance for deferred tax assets during the years ended December 31, 2023 and 2022, which related primarily to increases in net operating loss (NOL) carryforwards, research and development tax credits, capitalization of research and experimentation costs, and impairment of goodwill were as follows (in thousands):
|  | December 31,
|  | 2023 |  | 2022
Valuation allowance at the beginning of the year |  | $ | 38,567 |  |  | $ | 27,158 |
Increases recorded to income tax provision |  | 4,375 |  |  | 11,409 |
Valuation allowance at the end of the year |  | $ | 42,942 |  |  | $ | 38,567 |
At December 31, 2023 and 2022, the Company had federal NOL carryforwards of approximately $129.8 million and $118.4 million, respectively. At December 31, 2023 and 2022, the Company had state NOL carryforwards of $91.0 million and $87.0 million, respectively. Approximately $43.5 million of the federal tax loss carryforwards will begin to expire in 2024, unless previously utilized. The federal NOL carryforwards generated after December 31, 2017 of $86.3 million will carryforward indefinitely. The Company’s state tax loss carryforwards will begin to expire in 2030, unless previously utilized. At December 31, 2023, the Company's deferred tax assets are primarily comprised of federal and state tax NOL carryforwards. The Company completed a formal study through the year ended December 31, 2019 and determined ownership changes within the meaning of Internal Revenue Code (IRC), Section 382 had occurred in 2003, 2008, 2012, 2017 and 2019. Based on the analysis, $61.1 million of the Company's tax attribute carryforwards through December 31, 2017 cannot be utilized under IRC Section 382. The Company's ability to utilize NOL carryforwards generated after December 31, 2017 will not expire under the Tax Cuts and Jobs Act of 2017. The Company adjusted tax attribute carry forwards and deferred tax assets accordingly. As the deferred tax assets associated with the tax attribute carry forwards were fully offset by a valuation allowance, a corresponding reduction in the Company's valuation allowance was also recorded, resulting in no income tax impact. The Company is subject to taxation in the U.S. and in various state jurisdictions. The Company’s tax years for 2004 and forward are subject to examination by the U.S. and state tax authorities due to the carryforward of unutilized net operating losses and research and development credits. The Company recognizes interest and/or penalties related to income tax matters in its provision for income taxes. The Company does not have any material accruals for, and did not recognize any, material interest or penalties in these financial statements in any period presented. Uncertain Tax Positions At December 31, 2023 and 2022, the Company had no unrecognized tax benefits. The Company does not believe that the balance of unrecognized tax benefits will materially change within the next twelve months.

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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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