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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Note 6. Income Taxes Loss before income taxes are as follows (in thousands):
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |
Losses before income taxes: |  |  |  |  |  |  |  |
U.S. |  | $ | (23,408 | ) |  | $ | (16,174 | )
Non-U.S. |  |  | 193 |  |  |  | 163 |
Total |  | $ | (23,215 | ) |  | $ | (16,011 | )
The provision (benefit) for income taxes are as follows (in thousands):
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |
State |  |  | — |  |  |  | — |
Foreign |  |  | — |  |  |  | — |
|  |  | — |  |  |  | — |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | (404 | ) |  |  | — |
State |  |  | — |  |  |  | — |
Foreign |  |  | — |  |  |  | — |
|  |  | (404 | ) |  |  | — |
Provision (benefit) for income taxes |  | $ | (404 | ) |  | $ | — |
The Company is subject to income taxes under U.S. tax laws. The Company is subject to an Israeli corporate tax rate of 23% in 2020 and thereafter. The Company was subject to a blended U.S. tax rate (federal as well as state corporate tax) of 21% in 2019 and 2020. Significant judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities and the valuation allowance recorded against net deferred tax assets. Deferred tax assets and liabilities are determined using the enacted tax rates in effect for the years in which those tax assets are expected to be realized. A valuation allowance is established when it is more likely than not the future realization of all or some of the deferred tax assets will not be achieved. The evaluation of the need for a valuation allowance is performed on a jurisdiction-by-jurisdiction basis, and includes a review of all available positive and negative evidence. Factors reviewed include projections of pre-tax book income for the foreseeable future, determination of cumulative pre-tax book income after permanent differences, earnings history, and reliability of forecasting. Based on its review, the Company concluded that it was more likely than not that they would not realize the benefit of a portion of its deferred tax assets in the future. This conclusion was based on historical and projected operating performance, as well as the Company’s expectation that its operations will not generate sufficient taxable income in future periods to realize the tax benefits associated with the deferred tax assets within the statutory carryover periods. Therefore, the Company has a valuation allowance on its deferred tax assets as of December 31, 2020. The Company will continue to assess the need for a valuation allowance on its deferred tax assets by evaluating both positive and negative evidence that may exist. Any adjustment to the net deferred tax asset valuation allowance would be recorded in the statement of operations for the period that the adjustment is determined to be required. A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate is as follows:
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |
Statutory Federal income tax rate |  | $ | (4,875 | ) |  | $ | (3,362 | )
Tax credits |  |  | (215 | ) |  |  | (207 | )
Change in warrant fair market value |  |  | 1,014 |  |  |  | — |
Stock-based compensation |  |  | 252 |  |  |  | 141 |
Goodwill impairment |  |  | — |  |  |  | 392 |
Permanent items |  |  | 627 |  |  |  | 4 |
Section 382 limitation on net operating losses and credits |  |  | 10,562 |  |  |  | — |
Other |  |  | 89 |  |  |  | 38 |
Change in valuation allowance |  |  | (7,858 | ) |  |  | 2,994 |
Total provision (benefit) for income taxes |  | $ | (404 | ) |  | $ | — |
Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2020 and 2019 consisted of the following (in thousands):
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |
Net operating loss carryforwards |  | $ | 5,151 |  |  | $ | 9,947 |
Research and development tax credits |  |  | 705 |  |  |  | 506 |
Accruals and reserves |  |  | 14 |  |  |  | 43 |
Stock compensation |  |  | 802 |  |  |  | 391 |
Depreciation and amortization |  |  | 1,905 |  |  |  | 116 |
Lease liability |  |  | 30 |  |  |  | 68 |
Total deferred tax assets |  |  | 8,607 |  |  |  | 11,071 |
Right-of-use asset |  |  | (29 | ) |  |  | (66 | )
Acquired IPR&D |  |  | (6,801 | ) |  |  | — |
Total deferred tax liabilities |  |  | (6,830 | ) |  |  | (66 | )
Less: valuation allowance |  |  | (5,883 | ) |  |  | (11,005 | )
Net deferred tax liabilities |  | $ | (4,106 | ) |  | $ | — |
The following table reconciles the beginning and ending amounts of unrecognized tax benefits for the years presented (in thousands):
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |
Gross unrecognized tax benefits at the beginning of the year |  | $ | 548 |  |  | $ | 328 |
Additions from tax positions taken in the current year |  |  | 233 |  |  |  | 214 |
Additions from tax positions taken in prior years |  |  | 531 |  |  |  | 6 |
Reductions from tax positions taken in prior years |  |  | (548 | ) |  |  | — |
Tax settlements |  |  | — |  |  |  | — |
Gross unrecognized tax benefits at the end of the year |  | $ | 764 |  |  | $ | 548 |
The deferred income tax assets have been offset by a valuation allowance, as realization is dependent on future earnings, if any, the timing and amount of which are uncertain. The net valuation allowance decreased by $5.1 million. The Company’s accounting for deferred taxes involves the evaluation of a number of factors concerning the realizability of its net deferred tax assets. The Company primarily considered such factors as its history of operating losses, the nature of the Company’s deferred tax assets, and the timing, likelihood, and amount, if any, of future taxable income during the periods in which those temporary differences and carryforwards become deductible. At present, the Company does not believe that it is more likely than not that the deferred tax assets will be realized; accordingly, a valuation allowance has been established. As of December 31, 2020 and 2019, the Company had federal net operating loss carryforwards of approximately $14.4 million and $38.6 million, respectively, available to reduce future taxable income. As of December 31, 2020 and 2019, the Company also has state net operating loss carryforwards of $6.2 million and $0.9 million, respectively. The federal net operating loss carryforwards incurred before 2018 begin expiring in 2035 if not utilized. The federal net operating losses incurred since 2018 of $13.6 million do not expire. The state net operating losses begin to expire in 2035. As of December 31, 2020 and 2019, the Company had Israeli net operating losses of $7.9 million and $8.0 million, respectively, which carryforward indefinitely. As of December 31, 2020 and 2019, the Company had federal research and development tax credit carryforwards of approximately $966,000 and $764,000, respectively. If not utilized, the carryforwards will begin expiring in 2035. As of December 31, 2020 and 2019, the Company has state research and development credit carryforwards or approximately $562,000 and $264,000, respectively, which will begin expiring in 2030 if not utilized. Pursuant to Internal Revenue Code (“IRC) Sections 382 and 383, annual use of the Company’s net operating loss and research and development credit carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurs within a three-year period. As part of the equity raise and acquisition, the Company had an IRC Section 382/383 ownership change during 2020. The Company has removed $10.6 million of deferred tax assets related to NOL and R&D credit carryforwards due to the Section 382 limitations. The Company’s ability to use its remaining net operating loss and tax credit carryforwards may be further limited if the Company experiences additional Section 382 ownership change in connection with future changes in the Company’s stock ownership. In the United States, the Company files income tax returns in the U.S. Federal jurisdiction, California and Massachusetts. The Company’s tax years for 2017 and forward are subject to examination by the Federal and California tax authorities due to the carryforward of unutilized net operating losses and research and development credits. The Company’s policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. There was no accrued interest and penalties associated with uncertain tax positions as of December 31, 2020 and 2019. The Company has not recorded any interest or penalties in 2020 or 2019.

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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=84230637&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=116825942&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=84230637&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=116825942&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=84230637&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 + Details
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