Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.22.4
Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes
7. INCOME TAXES
The following table reconciles the United States statutory income tax rate to the Company’s effective income tax rate:
 
    
Year ended December 31,
  
    
2022
    
2021
    
2020
  
United States statutory rate
   
 
21.0
% 
     21.0 %      21.0 % 
State tax, net of federal benefit
   
 
1.0
% 
     1.0 %      4.2 % 
Stock-based compensation
   
 
(1.7
%) 
     (0.7 %)      (0.5 %) 
Officer compensation
   
 
(1.4
%) 
     1.5 %      (1.0 %) 
Deferred rate change
   
 
—  
% 
     —   %      —   % 
R&D credit
   
 
2.2
% 
     1.4 %      0.8 % 
PPP Loan
   
 
—  
% 
     1.1 %      —   % 
Unrealized (gain) loss on
mark-to-market
of common stock warrants
   
 
6.4
% 
     —   %      —   % 
Other
   
 
—  
% 
     0.1 %      (0.1 )% 
Change in valuation allowance
   
 
(27.5
%) 
     (25.4 %)      (24.4 %) 
    
 
 
    
 
 
    
 
 
  
Effective income tax rate
   
 
—  
% 
     —   %      —   % 
    
 
 
    
 
 
    
 
 
  
Deferred assets and liabilities consist of the following:
 
    
December 31,
  
In Thousands
   
2022
     
2021
     
2020
  
Net operating losses
   
$
40,914
 
    $ 38,671      $ 33,392  
Stock-based compensation
   
 
2,950
 
      2,724        2,531  
Financing lease obligations
   
 
—  
 
      3,820        4,574  
Operating lease ROU liabilities
   
 
2,921
 
      —             
Tax credit carry forwards
   
 
3,685
 
      3,210        2,577  
Capitalized R&D
   
 
2,183
 
      —             
Compensation
   
 
14
 
      514        339  
Derivative liability
   
 
—  
 
      —          703  
Other
   
 
124
 
      143        391  
    
 
 
     
 
 
     
 
 
  
Gross deferred tax assets
   
 
52,791
 
      49,082        44,507  
Less valuation allowance
   
 
(49,843
) 
      (45,369 )       (39,898 ) 
    
 
 
     
 
 
     
 
 
  
Net deferred tax assets
   
 
2,948
 
      3,713        4,609  
Fixed assets
   
 
(89
 )
 
      (3,667 )       (4,609 ) 
Operating lease ROU assets
   
 
(2,859
) 
      —             
Other
   
 
—  
 
      (46 )       —    
    
 
 
     
 
 
     
 
 
  
Gross deferred tax liabilities
   
 
(2,948
) 
      (3,713 )       (4,609 ) 
Net deferred tax asset or liability
   
$
—  
 
    $ —        $ —    
    
 
 
     
 
 
     
 
 
  
The Company provides for a valuation allowance when it is more likely than not that it will not realize a portion of the deferred tax assets. The Company has established a full valuation allowance for deferred tax assets described above due to the uncertainty that enough taxable income will be generated in the taxing jurisdiction to utilize the assets. Therefore, the Company has not reflected any benefit of such deferred tax assets in the accompanying consolidated financial statements.
The Company has $239.2 million of tax loss carryforwards. Of this amount, $55.2 million are state operating loss carryforwards and $184.0 million are federal operating loss carryforwards. The federal carryforward periods are as follows: $142.0 million do not expire and $41.9 million expire between 2032 and 2037. The state net operating losses will expire between 2027 and 2041, with some amounts having indefinite carryover. The Company also has federal and state R&D credit carryovers of $2.6 million and $1.3 million, which will expire between 2032 and 2042.
The Company is subject to federal income taxes in the United States as well as various state and local jurisdictions. The Company has reviewed its tax positions and concluded that no liability for uncertain tax positions is required as of December 31, 2022. The Company will classify any future interest and penalties as a component of income tax expense if incurred.
The Company does not expect the amount of uncertain tax positions to change significantly in the next 12 months. The Company’s major taxing jurisdictions are in the United States, at both the federal and state levels. The number of years open for examination varies depending on the tax jurisdiction but are generally from three to five years.