XML 40 R20.htm IDEA: XBRL DOCUMENT v3.22.4
Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes

Note 14 - Income Taxes

Since inception, the Company has incurred net taxable losses, and accordingly, no current provision for income taxes has been recorded. The effective income tax rate of the provision for income taxes differs from the federal statutory rate as follows:

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

Federal statutory income tax rate

 

 

21

%

 

 

21

%

State income taxes, net of federal benefit

 

 

5

 

 

 

5

 

Research and developments credits

 

 

1

 

 

 

1

 

Permanent items

 

 

(4

)

 

 

(1

)

Change in valuation allowance

 

 

(23

)

 

 

(26

)

Effective income tax rate

 

 

—

%

 

 

—

%

 

 

The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and liabilities are as follows (in thousands):

 

 

As of December 31,

 

 

 

2022

 

 

2021

 

Deferred Tax Assets:

 

 

 

 

 

 

Net operating loss carryforwards

 

$

70,822

 

 

$

61,874

 

Research and development tax credits

 

 

3,807

 

 

 

3,372

 

Interest expense limitation

 

 

3,036

 

 

 

554

 

Property and equipment

 

 

234

 

 

 

215

 

Capitalized research costs

 

 

2,874

 

 

 

—

 

Share-based compensation

 

 

1,619

 

 

 

1,977

 

Accruals and reserves

 

 

1,932

 

 

 

1,618

 

Total

 

 

84,324

 

 

 

69,610

 

Valuation allowance

 

 

(82,552

)

 

 

(67,457

)

Total deferred tax assets after valuation allowance

 

 

1,772

 

 

 

2,153

 

 

 

 

 

 

 

 

Deferred Tax Liabilities:

 

 

 

 

 

 

Intangible assets

 

 

(1,772

)

 

 

(2,153

)

Total deferred tax liabilities

 

 

(1,772

)

 

 

(2,153

)

 

 

 

 

 

 

 

Net deferred tax assets and liabilities

 

$

—

 

 

$

—

 

At December 31, 2022, the Company had $299.9 million and $4.8 million of federal net operating loss and research and experimentation tax carryforwards, respectively, which are set to expire beginning in 2026. The Internal Revenue Code contains provisions that may limit the net operating loss carryovers available to be used in any year if certain events occur, including significant changes in ownership interest.

In assessing the realizability of its deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As the Company does not have any historical taxable income, projections of future taxable income over the periods in which the deferred tax assets are deductible, and after consideration of the history of operating losses, the Company does not believe it is more likely than not that it will realize the benefits of net deferred tax assets and, accordingly, has established a valuation allowance equal to 100% of net deferred tax assets. The valuation allowance increased by $15.1 million during 2022 and $11.4 million during 2021.

The Company determined that it had uncertain tax positions related to its U.S. research and development credits. As of December 31, 2022 and 2021, there was no accrued interest related to uncertain tax positions. The Company does not believe it is reasonably possible that its unrecognized tax benefits will significantly change in the next twelve months. A reconciliation of beginning and ending balances for unrecognized tax benefits is as follows (in thousands):

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

Balance at January 1

 

$

843

 

 

$

715

 

Additions for tax positions related to the current year

 

 

109

 

 

 

128

 

Additions for tax positions related to prior years

 

 

—

 

 

 

—

 

Reductions for tax positions related to prior years

 

 

—

 

 

 

—

 

Reductions related to settlements

 

 

—

 

 

 

—

 

Reductions related to a lapse of statute

 

 

—

 

 

 

—

 

Balance at December 31

 

$

952

 

 

$

843

 

The Company monitors proposed and issued tax law, regulations, and cases to determine the potential impact of uncertain income tax positions. At December 31, 2022, the Company had not identified any potential subsequent events that would have a material impact on unrecognized income tax benefits within the next twelve months.

The Company’s federal and state returns for all years will remain open to examination by federal and state tax authorities for three and four years, respectively, from the date of utilization of any net operating loss carryforwards.