Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

10. Income Taxes

As of December 31, 2021, the Company had available net operating loss carryforwards for federal income tax reporting purposes of approximately $74.9 million and for state income tax reporting purposes of approximately $73.0 million, which may be applied against future taxable income and will expire in various years through 2037. However, any net operating loss carryforwards generated in 2018 and future years will not expire and are carried forward indefinitely. The increase in federal operating loss carryforwards for the year ended December 31, 2021 was approximately $1.9 million.

The amount of and ultimate realization of the benefits from the operating loss carryforwards for income tax purposes is dependent, in part, upon the tax laws in effect, the future earnings of the Company, and other future events, the effects of which cannot be determined at this time. Because of the uncertainty surrounding the realization of the loss carryforwards, the Company has established a valuation allowance equal to the tax effect of the loss carryforwards, research and development credits, and accruals; therefore, no net deferred

tax asset has been recognized. A reconciliation of the statutory federal income tax rate and the effective income tax rate for the years ended December 31, 2021 and 2020 was as follows:

	Years Ended December 31,
	2021			2020
Statutory federal income tax rate		21.0	%		21.0	%
Permanent items		(7.0	%)		(2.8	%)
State income taxes, net of federal taxes		(0.2	%)		(0.1	%)
Foreign		(0.8	%)		(0.3	%)
Change in valuation allowance		46.6	%		(19.1	%)
Forgiveness of PPP loans		26.7	%		0.0	%
Stock options		(83.8	%)		(5.4	%)
Lease accounting		(0.1	%)		(0.1	%)
Other		(2.4	%)		6.8	%
Effective income tax rate		0.0	%		0.0	%

The Company files income tax returns in the U.S. federal jurisdiction and various states. The Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2017. The Company does not have any material uncertain tax positions as of December 31, 2021 and 2020. The Company does not believe it is reasonably possible that the total amount of unrecognized tax benefits as of December 31, 2021 will materially change in the next 12 months.

The Company may be subject to IRC Code Section 382 and 383, which could limit the amount of the net operating loss and tax credit carryovers that can be used in future years. The Company has not completed a study to assess whether an ownership change has occurred, as defined by IRC Sections 382 and 383, or whether there have been ownership changes since the Company's formation due to the complexity and cost associated with such study, and the fact that there may be additional such ownership changes in the future. The Company estimates that if such a change did occur, the federal and state net operating loss carryforwards and research and development credit carryforwards that can be utilized in the future would be significantly limited. There can be no assurance that the Company will ever be able to realize the benefit of some or all of the federal and state loss carryforwards or credit carryforwards, either due to ongoing operating losses or due to ownership change limitations.

The CARES Act provides sweeping tax changes in response to the COVID-19 pandemic. Some of the more significant provisions are 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. As of December 31, 2021, the Company has not recorded any material adjustments to its income tax provision related to the provisions within the CARES Act. The Company will continue to analyze the impact that the CARES Act will have, if any, on its financial position, results of operations or cash flows.

Significant components of deferred tax assets and liabilities are as follows (in thousands):

	December 31,			December 31,
	2021			2020
Net operating loss carryforwards	$	19,603		$	19,152
Stock-based compensation		1,153			1,936
Research and development tax credit		2,899			2,899
Other		235			397
Non-current deferred tax assets		23,890			24,384
Valuation allowance		(23,890	)		(24,384	)
Net deferred tax assets	$	—		$	—