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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Taxes  
Income Taxes

12. Income Taxes

The net loss consists of the following components:

​

​

​

​

​

​

​

​

​

​

Year Ended December 31, 

​

    

2022

    

2021

Domestic

​

$

(21,384)

​

$

(10,910)

Foreign

​

 

(13)

​

 

(806)

Total

​

$

(21,397)

​

$

(11,716)

​

​

During the years ended December 31, 2022 and 2021, the Company recorded no current or deferred income tax expenses or benefits as the Company has incurred losses since inception and has provided a full valuation allowance against its deferred tax assets.

Global Intangible Low-Taxed Income (“GILTI”) is the excess of a U.S. shareholders total net foreign income over a deemed return on tangible assets. In January 2018, in response to inquiries by companies, the FASB issued guidance that allows companies to elect as an accounting policy whether to treat the GILTI tax as a period cost or to recognize deferred tax assets and liabilities when basis differences exist that are expected to affect the amount of GILTI inclusion upon reversal. The Company has elected to treat GILTI as a period expense.

Effective January 1, 2022, the Tax Cuts and Jobs Act of 2017 requires the Company to capitalize, and subsequently amortize R&D expense over five years for research activities conducted in the U.S. and over fifteen years for research activities conducted outside of the U.S. This results in a material increase to the Company’s net deferred tax assets. Furthermore, since the Company provides for a full valuation allowance against U.S deferred tax assets, this has an adverse effect on the effective tax rate.

A reconciliation of the expected income tax (benefit) computed using the federal statutory income tax rate to the Company’s effective income tax rate is as follows:

​

​

​

​

​

​

​

​

​

Year Ended December 31, 

 

​

    

2022

    

2021

 

Income tax computed at federal statutory rate

 

21.0

%  

21.0

%

State taxes, net of federal benefit

 

(15.3)

%  

4.1

%

Change in valuation allowance

 

12.0

%  

(32.9)

%

R&D Credit

 

(15.1)

%  

11.2

%

Interest expense

 

—

%  

4.6

%

Non-deductible stock compensation

 

(1.7)

%  

(5.8)

%

Fair value adjustments

​

—

%  

(3.5)

%

Other

 

(0.9)

%  

1.3

%

Effective income tax rate

 

—

%  

—

%

​

The Company’s deferred tax assets and liabilities consist of the following:

​

​

​

​

​

​

​

​

​

    

Year Ended December 31, 

​

​

2022

​

2021

Deferred tax assets:

​

​

​

​

​

​

Net operating loss carryforwards

​

$

8,194

​

$

13,238

Tax credit carryforwards

​

 

1,728

​

 

4,959

Equity-based compensation

​

​

307

​

​

545

Operating lease liabilities

​

 

178

​

 

—

Capitalized research expenditures

​

​

5,687

​

​

—

Deferred revenue

​

​

354

​

​

—

Other

​

 

165

​

 

316

Deferred tax assets

​

 

16,613

​

 

19,058

Less: valuation allowance

​

 

(16,435)

​

 

(19,045)

Deferred tax assets after valuation allowance

​

 

178

​

 

13

​

​

​

​

​

​

​

Deferred tax liabilities:

​

 

  

​

 

  

Property and equipment, net

​

 

(7)

​

 

(13)

Right-of-use assets, operating leases

​

 

(171)

​

 

—

Deferred tax liabilities

​

 

(178)

​

 

(13)

​

​

​

​

​

​

​

Net deferred tax assets

​

$

—

​

$

—

​

The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets as of December 31, 2022 and 2021. Management has considered the Company’s history of cumulative net losses and has concluded as of December 31, 2022 and 2021, that it was more likely than not that the Company will not realize all of the benefits of the deferred tax assets. Accordingly, a full valuation allowance has been established against the deferred tax assets as of December 31, 2022 and 2021. The valuation allowance decreased by $2,610 and increased by $3,866 for the years ended December 31, 2022 and 2021, respectively. The decrease in valuation allowance in 2022 was primarily a result of a reduction in operating losses and tax credits, offset partially by the capitalized research expenditures, while the increase in 2021 was primarily a result of operating losses generated with no corresponding financial statement benefit.

The Company incurred net operating losses (“NOL”) since inception through December 31, 2021. Due to tax law changes, effective January 1, 2022, requiring the Company to capitalize and amortize R&D expenses, the Company is in a taxable position as of December 31, 2022 and has utilized NOL generated in prior years to fully offset their current income tax expense. As of December 31, 2022, the Company had federal net operating loss carryforwards of $36,272. Included in federal net operating loss carryforwards of $36,272 is $17,930 that begin to expire in 2033 and $18,342 that can be carried forward indefinitely. As of December 31, 2022, the Company had state net operating loss carryforwards of $12,248, available to reduce future state taxable income, which will begin to expire in 2027. As of December 31, 2022, the Company had foreign net operating loss carryforwards of $314 that can be carried forward indefinitely. As of December 31, 2022, the Company had federal research and development tax credit carryforwards of $1,728 available to reduce future federal tax liabilities, which will begin to expire in 2027.

Utilization of the Company’s net operating loss carryforwards and research and development tax credit carryforwards may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986 due to ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50% over a three-year period. The Company has not conducted a study to assess whether a change of control has occurred or whether there have been multiple changes of control since inception due to the significant complexity and cost associated with such a study. If the Company has experienced a change of control, as defined by Section 382, at any time since inception, utilization of the net operating loss carryforwards or research and development tax credit carryforwards would be subject to an annual limitation under

Section 382, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term tax-exempt rate, and then could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the net operating loss carryforwards or research and development tax credit carryforwards before utilization. Further, until a study is completed, and any limitation is known, no amounts are being presented as an uncertain tax position.

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending tax examinations. The Company is open to further tax examination under statue from 2018 to present; however, carryforward attributes that were generated prior to December 31, 2018 may still be adjusted upon examination by federal, state or local tax authorities if they either have been or will be used in a future period.