Income Taxes

12 Months Ended

Jan. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Note 10: Income Taxes

Loss before income taxes consisted of the following components (in thousands):

	Fiscal Year Ended January 31,
	2022			2021			2020
United States	$	1,340		$	(120	)	$	(17,051	)
Foreign		(3,091	)		(2,236	)		(1,880	)
Loss before income taxes	$	(1,751	)	$	(2,356	)	$	(18,931	)

Income tax provision (benefit) differed from the amount computed by applying the U.S. federal income tax rate to pre-tax loss as a result of the following (dollars in thousands):

	Fiscal Year Ended January 31,
	2022			Rate			2021			Rate			2020			Rate
Federal tax at statutory rate	$	(368	)		21	%	$	(495	)		21	%	$	(3,975	)		21	%
State taxes, net of federal benefit		52			(3	)%		75			(3	)%		12			—
Foreign income and withholding taxes		(185	)		11	%		(87	)		3	%		(98	)		1	%
Permanent tax adjustment		58			(3	)%		163			(7	)%		114			(1	)%
Section 162(m)		1,050			(60	)%		598			(25	)%		606			(3	)%
Stock-based compensation		(1,545	)		88	%		(251	)		11	%		(624	)		3	%
Change in valuation allowance		2,959			(169	)%		185			(8	)%		5,445			(29	)%
Research and development credit		(1,980	)		113	%		(243	)		10	%		(1,279	)		7	%
Other		(41	)		2	%		140			(6	)%		(331	)		2	%
Income tax provision (benefit) at effective tax rate	$	—			(0	)%	$	85			(4	)%	$	(130	)		1	%

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

	As of January 31,
	2022			2021
Deferred tax assets:
Net operating loss carryforwards	$	34,808		$	33,211
Tax credit carryover		10,905			8,963
Operating lease right-of-use assets		3,482			1,686
Stock-based compensation		1,114			1,101
Acquired intangible assets		256			53
Deferred revenue		18			19
Other		26			14
Gross deferred tax assets		50,609			45,047
Valuation allowance		(45,111	)		(42,153	)
Net deferred tax assets	$	5,498		$	2,894
Deferred tax liabilities:
Operating lease liabilities	$	(3,468	)	$	(1,533	)
Accruals and reserves		(1,994	)		(1,265	)
Fixed assets depreciation		(36	)		(96	)
Gross deferred tax liabilities	$	(5,498	)	$	(2,894	)
Net deferred taxes	$	—		$	—

Management believes that, based upon the available evidence, both positive and negative, it is more likely than not that the deferred tax assets will not be utilized, such that a full valuation allowance has been recorded. The net change in the total valuation allowance for fiscal 2022 and 2021 were increases of $3.0 million and $0.6 million, respectively.

As of January 31, 2022, the Company had net operating loss carryforwards for federal and state tax purposes of approximately $125.1 million and $94.8 million, respectively, available to offset future taxable income. If not utilized, these available carryforward losses will expire in various amounts for federal and state tax purposes beginning in 2030. In addition, the Company had research and development tax credits for federal and state purposes of approximately $10.5 million and $9.8 million, respectively, available to offset future taxes. If not utilized, the available federal credits will begin to expire in 2030. California state research and development tax credits can be carried forward indefinitely.

Immaterial Corrections of Prior Period Disclosures. Subsequent to the Company’s filing of its Annual Report on Form 10-K for the year ended January 31, 2021, the Company identified certain errors relating to its presentation of deferred tax assets, specifically net operating loss carryforwards and the associated valuation allowance for state tax purposes. As a result, the previously reported net operating loss carryforwards deferred tax asset and the valuation allowance were each reduced by $7.4 million. These corrections had no impact on the Company’s income tax provision (benefit) reported in the consolidated statements of operations and no impact on net deferred taxes in the consolidated balance sheet as of and for the year ended January 31, 2021. The Company has evaluated the materiality of these errors based on an analysis of quantitative and qualitative factors and concluded they were not material to the prior period financial statements, individually or in the aggregate.

Uncertain Tax Positions

The Company has unrecognized tax benefits of approximately $8.1 million as of January 31, 2022. Deferred tax assets associated with these unrecognized tax benefits are fully offset by a valuation allowance. If recognized, these benefits would not affect the effective tax rate before consideration of the valuation allowance.

The following table summarizes the activity related to unrecognized tax benefits (in thousands):

Balance at January 31, 2020	$	6,017
Decrease related to prior year positions		(362	)
Increase related to current year tax positions		987
Balance at January 31, 2021		6,642
Increase related to current year tax positions		1,448
Balance at January 31, 2022	$	8,090

The Company had no interest or penalty accruals associated with uncertain tax benefits in its balance sheets and statements of operations. The Company does not have any tax positions for which it is reasonably possible the total amount of gross unrecognized benefits will increase or decrease within 12 months of the year ended January 31, 2022.

Because the Company has net operating loss and credit carryforwards, there are open statutes of limitations in which federal, state and foreign taxing authorities may examine the Company’s tax returns for all tax years from 2009 through the current period.