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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Note 15. Income Taxes For financial reporting purposes, loss before income taxes includes the following components:
|  | Years Ended December 31, |
|  | 2023 |  |  | 2022 |
United States |  | $ | (14,383 | ) |  | $ | (19,914 | )
Foreign |  |  | — |  |  |  | — |
Total |  | $ | (14,383 | ) |  | $ | (19,914 | )
The provision for income taxes for the years ended December 31, 2023 and 2022 consisted of the following:
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |
Current income tax expense (benefit) |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |
State |  |  | — |  |  |  | — |
Foreign |  |  | — |  |  |  | — |
Total current |  |  | — |  |  |  | — |
Deferred income tax (benefit) |  |  |  |  |  |
Federal |  |  | — |  |  |  | — |
State |  |  | — |  |  |  | — |
Foreign |  |  | — |  |  |  | — |
Total deferred |  |  | — |  |  |  | — |
Total provision |  | $ | — |  |  | $ | — |
A reconciliation of the income tax provision computed using the U.S. statutory federal income tax rate compared to the income tax provision included in the statements of operations is as follows:
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |
Tax at U.S. statutory rate on income before income taxes |  | $ | (3,020 | ) |  | $ | (4,182 | )
Change in valuation allowance |  |  | 1,540 |  |  |  | 3,317 |
State taxes |  |  | (376 | ) |  |  | (369 | )
Section 162(m) |  |  | 248 |  |  |  | 363 |
Stock-based compensation |  |  | 191 |  |  |  | 170 |
Deferred adjustment |  |  | 773 |  |  |  | 706 |
Warrant expense |  |  | 599 |  |  |  | — |
Other |  |  | 45 |  |  |  | (5 | )
Total |  | $ | — |  |  | $ | — |
Deferred tax assets and liabilities are determined based on the differences between financial reporting and income tax bases of assets and liabilities, as well as net operating loss carryforwards, and are measured using the enacted tax rates and laws in effect when the differences are expected to reverse. The significant components of the Company’s net deferred tax assets and liabilities are as follows:
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |
Deferred tax assets: |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 1,836 |  |  | $ | 5,855 |
Net operating loss carryforwards - Section 382 limited |  |  | 6,195 |  |  |  | — |
Intangible assets |  |  | 5,530 |  |  |  | 5,866 |
Capitalization of research and experimentation expenses |  |  | 3,211 |  |  |  | 2,533 |
Stock-based compensation |  |  | 727 |  |  |  | 1,150 |
Fixed assets |  |  | 165 |  |  |  | 272 |
Other |  |  | 1,257 |  |  |  | 658 |
Total deferred tax assets |  |  | 18,921 |  |  |  | 16,334 |
Valuation allowance |  |  | (17,871 | ) |  |  | (16,331 | )
Total deferred tax assets, net of valuation allowance |  |  | 1,050 |  |  |  | 3 |
Deferred tax liabilities: |  |  |  |  |  |
Section 481(a) adjustment |  |  | (670 | ) |  |  | — |
Other |  |  | (380 | ) |  |  | (3 | )
Total deferred tax liabilities |  |  | (1,050 | ) |  |  | (3 | )
Net deferred tax assets |  | $ | — |  |  | $ | — |
The deferred tax assets associated with net operating losses included in the table above for the years ended December 31, 2023 and 2022 reflect the net operating losses the Company expects to generate on its federal and state income tax returns. As of December 31, 2023 and 2022, the Company maintained federal net operating loss carryforwards of $32,452 and $23,935, respectively. As of December 31, 2023 and 2022, the Company also maintained state net operating loss carryforwards of $22,612 and $18,724, respectively. The federal net operating losses generated during years ended December 31, 2023 and 2022 (and not Section 382 limited; see below) may only be utilized to offset 80% of taxable income annually and may be carried forward indefinitely. The state net operating loss carryforwards generated will begin expiring in the year 2028, if not utilized. Certain of our federal and state tax attributes are subject to change of ownership limitations provided by the Internal Revenue Code and similar state provisions. In general, if the Company experiences a greater than 50 percentage point aggregate change in ownership over a 3-year period (a “Section 382 ownership change”), utilization of its pre-change NOL and credit carryforwards are subject to an annual limitation. The Company experienced such a change as a result of the SPA. The Company completed a Section 382 study through December 31, 2023 and determined that a Section 382 ownership change occurred on May 18, 2023. At the time, the Company was in a net unrealized built-in loss position (“NUBIL”). The amount of pre-change NOL carryforwards which may be subject to this limitation are $25,741. As of December 31, 2023, the Company determined that it continued to be more likely than not that certain deferred tax assets would not be realized in the near future and maintained a $17,871 valuation allowance against deferred tax assets. The net change in total valuation allowance between the years ended December 31, 2023 and 2022, was an increase of $1,540. The Company’s determination was based on its review and analysis of all the available evidence as of the balance sheet date, both positive and negative. The uncertainty provisions of ASC 740 also require the Company to recognize the impact of a tax position in its financial statements only if the technical merits of that position indicate that the position is more likely than not of being sustained upon audit. During the years ended December 31, 2023 and 2022, the Company did not record a reserve for uncertain tax positions. The Company’s income tax returns for periods separate from the consolidation with PDL are subject to examination by U.S. federal, state and local tax authorities for tax years 2020 forward. The Company's separate state and local tax returns are generally not subject to examination by authorities for tax years prior to 2017; however, as we utilize our net operating losses, prior years can be subject to examination from 2012 forward. The Company is not currently under examination in any significant tax jurisdictions. Interest and penalties associated with unrecognized tax benefits accrued on the balance sheet were $0 as of December 31, 2023 and 2022. The 2017 Tax Cuts and Jobs Act requires taxpayers to capitalize research and experimental (“R&E”) expenditures effective for taxable years beginning after December 31, 2021. R&E expenditures attributable to U.S.-based research must be amortized over a period of 5 years and R&E expenditures attributable to research conducted outside of the U.S. must be amortized over a period of 15 years. As noted above, there is pending legislation that would allow for full deductibility of these expenditures. The Company does not believe that this has a material impact on its financial statements.

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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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