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Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes

Income Taxes

10. Income Taxes

During the year end December 31, 2020, the Company’s Israeli operations were dissolved and as a result, the Company wrote off all existing deferred tax assets related to the Israeli operations which consisted primarily of net operating loss carryforwards. The write off of the deferred tax assets was offset by an equal reduction in the valuation allowance.

As of December 31, 2021, the Company had federal and state net operating loss carryforwards of approximately $196,224 and $177,951, respectively, which begin to expire in 2030 for federal and state purposes. The Company’s federal net operating losses include $114,915 which can be also carried forward indefinitely.

The Company may be able to utilize its net operating loss carryforwards to reduce future federal and State income tax liabilities. However, these net operating losses are subject to various limitations under Internal Revenue Code (“IRC”) section 382, which limit the use of net operating loss carryforwards to the extent there has been an ownership change of more than 50 percentage points. In addition, the net operating loss carryforwards are subject to examination by taxing authorities and could be adjusted or disallowed due to such exams. Although the Company has not undergone an IRC section 382 analysis, it is possible that the utilization of the Company’s net operating loss carryforwards may be limited.

In addition, the Company has federal and state research and development tax credits of approximately $6,166 and $1,273, respectively, that begin to expire in 2030 for federal and state tax purposes.

There is no provision for income taxes in the United States because the Company has historically incurred operating losses and maintains a full valuation allowance against its deferred tax assets in these jurisdictions. The deferred tax asset recorded in the consolidated balance sheet relates to its Australian operations.

Income (loss) before income taxes consisted of the following:

​

​	​	​	​	​	​	​
​	​	Year Ended
​	​	December 31,
​		2021			2020
U.S.	​	$	(39,155)	​	$	(28,699)
Foreign	​		(1,456)	​		1,183
Loss before income taxes	​	$	(40,611)	​	$	(27,516)

​

10. Income Taxes (continued)

A summary of the Company’s current and deferred expense for income tax is as follows:

​

​	​	​	​	​	​	​
​	​	Year Ended
​	​	December 31,
​		2021			2020
Current expense (benefit):	​	​	​	​	​	​
Federal	​	$	—	​	$	—
State	​		—	​		—
Foreign	​		(37)	​		40
Total current expense (benefit):	​	$	(37)	​	$	40
Deferred expense (benefit):	​	​	​	​	​	​
Federal	​	$	—	​	$	—
State	​		—	​		—
Foreign	​		13	​	​	(42)
Total deferred expense (benefit):	​	$	13	​	$	(42)
Total income tax expense (benefit):	​	$	(24)	​	$	(2)

​

A reconciliation of the Company’s statutory income tax rate to the Company’s effective income tax rate is as follows:

​

​	​	​	​	​	​
​	​	Year Ended
​	​	December 31,			​
​		2021		2020
Income at US Statutory Rate		21.0	%	21.0	%
State Taxes, net of Federal benefit		7.2	%	7.0	%
Permanent Differences		(1.8)	%	(1.1)	%
Tax Credits		3.9	%	6.0	%
Foreign Rate Differential		0.2	%	(0.5)	%
Israel DTA write-off	​	0.0	%	(70.2)	%
Valuation Allowance		(30.6)	%	36.6	%
Other		0.1	%	1.2	%
​		0.0	%	0.0	%

​

10. Income Taxes (continued)

The significant components of the Company’s deferred tax assets as of December 31, 2021 and 2020 were as follows:

​

​	​	​	​	​	​	​
​	​	Year Ended
​	​	December 31,
​		2021			2020
Accrued expenses	​	$	729	​	$	455
License Fees	​	​	1,004	​		1,168
Stock Options	​	​	4,671	​		3,759
Other	​	​	212	​		228
State net operating loss carryforwards	​	​	11,246	​		8,959
State research tax credits	​	​	1,006	​		625
Federal net operating loss carryforwards	​	​	41,207	​		33,711
Federal research tax credits	​	​	6,166	​		4,943
Total deferred tax assets	​	​	66,241	​	​	53,848
Valuation allowance	​		(66,082)	​		(53,669)
Net deferred tax asset (liability)	​	$	159	​	$	179

​

As of December 31, 2021 and 2020, the Company had provided a full valuation allowance against its net deferred tax assets, except for its Australian deferred tax assets, because realization of any future tax benefit cannot be reasonably assured. The valuation allowance decreased during the year ended December 31, 2020 by $10,068 and increased during the year ended December 31, 2021 by $12,413.

The Company follows the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Company to determine whether a tax position of the Company is more likely than not to be sustained upon examination, including resolution of any related appeals of litigation processes, based on the technical merits of the position. For tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements is reduced by the largest benefit that has a greater than 50% likelihood of being realized upon the ultimate settlement with the relevant taxing authority. As of December 31, 2021 the Company has not recorded any uncertain tax positions.

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’s U.S. federal and state net operating losses have occurred since its inception and as such, tax years subject to potential tax examination could apply from 2010, the earliest year with a net operating loss carryover, because the utilization of net operating losses from prior years opens the relevant year to audit by the IRS and/or state taxing authorities. The Company’s policy is to record interest and penalties related to income taxes as part of the tax provision. There were no interest and penalties pertaining to uncertain tax positions for the years ended December 31, 2021 or 2020.

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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.

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