Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

9. Income Taxes

No provision for federal income taxes has been recorded for the years ended December 31, 2022 and 2021 due to net losses and the valuation allowance established.

Deferred tax assets and liabilities reflect the net tax effects of net operating loss and tax credit carryovers and the temporary differences between the carrying amounts of assets and liabilities for financial reporting and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets are as follows:

	As of December 31,
	2022			2021
Deferred tax assets:
Net operating losses	$	151,433		$	143,732
Research and other credits		2,178			2,178
Stock based compensation		4,087			3,354
In-Process research and development		511			1,132
Capitalized research and development costs		12,686			-
Other		468			230
Total deferred tax assets		171,363			150,626
Valuation allowance		(171,363	)		(150,626	)
Net deferred tax assets	$	-		$	-

A reconciliation of the statutory tax rates to the effective tax rates for the years ended December 2022 and 2021 is as follows:

	Year Ended December 31,
	2022			2021
Statutory rate		21.0	%		21.0	%
Valuation allowance		(29.8	)%		(28.5	)%
Nondeductible stock compensation		1.9	%		0.4	%
Other		6.9	%		7.1	%
Effective tax rate		-	%		-	%

Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by $20.7 million and $68.2 million during the years ended December 31, 2022 and 2021, respectively.

At December 31, 2022, the Company had federal net operating loss carryforwards of approximately $166.2 million, which expire in the years 2024 through 2037, and state net operating loss carryforwards of approximately $542.9 million, which expire in the years 2028 through 2042. The Company also has federal net operating loss carryforwards generated in the years 2018 through 2022 of $375.3 million that have no expiration date.

At December 31, 2022, the Company had federal research and development credit carryforwards of approximately $1.3 million, which expire in the years 2022 through 2035 and state research and development credit carryforwards of approximately $2.2 million. The state research and development credit carryforwards can be carried forward indefinitely.

During 2013, the Company completed a Section 382 study in accordance with the Internal Revenue Code of 1986, as amended, and similar state provisions. The study concluded that the Company has experienced several ownership changes since inception. This causes the Company’s utilization of its net operating loss and tax credit carryforwards to be subject to substantial annual limitations. These results are reflected in the above carryforward amounts and deferred tax assets. The Company’s ability to utilize its net operating loss and tax credit carryforwards are further limited as a result of subsequent ownership changes. All such limitations could result in the expiration of carryforwards before they are utilized. An ownership change may have occurred in periods subsequent to the completion of the Section 382 study. As a result, tax attributes such as net operating losses and research and development credits may be subject to further limitation.

ASC 740 requires that the Company recognize the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Balance at December 31, 2020	$	1,060
Additions based on tax positions related to prior year		-
Additions based on tax positions related to current year		-
Balance at December 31, 2021		1,060
Additions based on tax positions related to prior year		-
Additions based on tax positions related to current year		-
Balance at December 31, 2022	$	1,060

There were no interest or penalties related to unrecognized tax benefits. Substantially all of the unrecognized tax benefit, if recognized to offset future taxable income would affect the Company’s tax rate. The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease within the next 12 months. Because of net operating loss carryforwards, substantially all of the Company’s tax years remain open to federal tax and state tax examination.

The Company files income tax returns in the US federal jurisdiction, California and Florida. Federal and Florida corporate income tax returns beginning with 2019 remain subject to examination by the Internal Revenue Service and Florida Department of Revenue, respectively. California corporation income tax returns beginning with the 2018 tax year remain subject to examination the California Franchise Tax Board.