Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 9 - Income Taxes

The Company’s loss before income taxes was $34.8 million and $26.1 million for the years ended December 31, 2021 and 2020, respectively.

The Company’s provision for income taxes consists of the following for the years ended December 31, 2021 and 2020:

	December 31,
	2021		2020
Current income tax provision
Federal	$	36,084	$	—
State		7,744		—
Foreign		—		132,403
Total		43,828		132,403
Deferred income tax provision
Federal		—		—
State		—		—
Foreign		—		—
Total		—		—
Total provision for income taxes	$	43,828	$	132,403

F-29

At December 31, 2021 and 2020, the Company had deferred tax assets of $106,839,267 and $103,185,302, respectively, primarily consisting of NOL carryforwards, research and development (“R&D”) credits, and differences between depreciation and amortization recorded for financial statement and tax purposes. The Company’s net deferred tax assets at December 31, 2021 and 2020 have been offset by a valuation allowance of $106,088,316 and $98,874,420, respectively. The valuation allowance has been recorded due to the uncertainty of realization of the deferred tax assets. The Company’s deferred tax assets and liabilities as of December 31, 2021 and 2020 are as follows:

	December 31,
	2021			2020
Deferred tax assets:
NOL carryforward	$	102,388,393		$	98,165,790
R&D credit carryforward		2,559,479			2,559,479
Share-based compensation		498,658			319,397
Depreciation		—			100,157
Interest expense		502,575			1,233,203
ROU liabilities		567,624			475,645
Accruals and other		322,538			331,631
Total deferred tax assets		106,839,267			103,185,302
Valuation allowance		(106,088,316	)		(98,874,420	)
Deferred tax liabilities:
Intangible assets		(178,478	)		(3,885,485	)
ROU assets		(225,057	)		(425,397	)
Depreciation		(347,416	)		—
Net	$	—		$	—

The difference between the Company’s expected income tax provision (benefit) from applying federal statutory tax rates to the pre-tax loss and actual income tax provision (benefit) relates to the effect of the following:

	2021			2020
Federal income tax benefit at statutory rates		21.0	%		21.0	%
Permanent adjustment		(4.4	)%		0.6	%
Provision to return adjustment		(0.1	)%		—
State income tax benefit, net of federal benefit		1.6	%		3.5	%
Foreign rate differential		2.4	%		2.8	%
Change in valuation allowance		(20.6	)%		(28.4	)%
		(0.1	)%		(0.5	)%

Management followed the guidance in ASC 740, which states that “a cumulative loss in recent years is a significant piece of negative evidence that is difficult to overcome” and concluded that the Company’s net deferred tax assets were not realizable as of December 31, 2021 and 2020. Accordingly, a valuation allowance of $106.1 million and $98.9 million has been recorded to offset the net deferred tax assets.

The Company has federal NOL carryforwards of $202,015,062 and $196,511,928 at December 31, 2021 and 2020, respectively. The Company also has total Foreign NOL carryforwards at December 31, 2021 of $170,607,782 which is primarily driven by the Company's operations in Germany. The NOL carryforwards incurred prior to 2018 begin to expire in 2022. In December 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act"), most of the provisions of which took effect starting in 2018. Under the Tax Act, the amount of post 2017 NOLs that we are permitted to deduct in any taxable year is limited to 80% of our taxable income in such year, where taxable income is determined without regard to the NOL deduction itself. In addition, the Tax Act generally eliminates the ability to carry back any NOL to prior taxable years, while allowing post 2017 unused NOLs to be carried forward indefinitely. Utilization of the NOL carryforward may be subject to an annual limitation as provided by Section 382 of the Code, defined earlier. There can be no assurance that the NOL carryforward will ever be fully utilized. To date, the Company has not performed a formal study to determine if any of its remaining NOL and credit attributes might be further limited due to the ownership change rules of Section 382 or Section 383 of the Code, as amended. The Company will continue to monitor this matter going forward. There can be no assurance that the NOL carryforwards will ever be fully utilized.

F-30

On March 27, 2020, the United States enacted the CARES Act. The CARES Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the United States economy and fund a nationwide effort to curtail the effect of COVID-19. While the CARES Act provides sweeping tax changes in response to the COVID-19 pandemic, some of the more significant provisions which are expected to impact the Company's financial statements include removal of certain limitations on utilization of net operating losses, increasing the loss carryback period for certain losses to five years, and increasing the ability to deduct interest expense, as well as amending certain provisions of the previously enacted Tax Cuts and Jobs Act. The Company doesn't believe that the CARES Act will have a material impact on its financial position, results of operations, or cash flows.