INCOME TAXES

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The reconciliation between federal income taxes at the statutory U.S. federal income tax rate and the Company’s income tax expense for the year is as follows:  

(in thousands)	December 31, 2021		December 31, 2020
Tax benefit at statutory rate	$	(2,038)	$	(1,658)
Other	4		200
Stock based compensation	780		642
Offering issuance costs and changes in fair value of warrants and private placement option	(3,176)		(9,687)
Deferred tax valuation allowances	4,718		11,690
Research and development credit	(288)		(1,187)
Income tax expense	$	—	$	—

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes, and the amounts used for income tax purposes. Significant components of the Company’s deferred taxes as of December 31, 2021 and 2020 are as follows:

(in thousands)	December 31, 2021		December 31, 2020
Deferred tax assets (liabilities):
Net operating loss carryforward	$	100,346	$	94,132
Stock compensation	3,541		3,539
Intangible assets	7,156		7,682
Research and development credit	18,076		17,787
Operating lease assets	—		(213)
Operating lease liabilities	—		354
Other	(144)		976
Total deferred tax assets, net of deferred tax liabilities	128,975		124,257
Valuation allowance	(128,975)		(124,257)
Net deferred tax	$	—	$	—

Net operating loss carryforwards and research tax credits as of December 31, 2021 and 2020 are as follows:

(in thousands)	December 31, 2021		December 31, 2020
U.S. federal income tax net operating loss carryforwards	$	477,839	$	448,250
U.K. net operating loss carryforwards	$	—	$	133
U.S. federal research tax credits	$	12,985	$	12,535
Texas research tax credits	$	5,091	$	5,252

The Company has $228.4 million of U.S. federal net operating loss carryovers that have no expiration date and the remaining begin to expire in 2025. The U.S. Federal and state research credits will begin to expire in 2028 and 2034 respectively. No study has been performed on the research and development (R&D) credits and gross R&D credits in the amount of $17.8 million could be limited based on review by the Internal Revenue Service.

The Internal Revenue Code Section 382 limits NOL and tax credit carry forwards when an ownership change of more than 50% of the value of the stock in a loss corporation occurs. Accordingly, the ability to utilize remaining NOL and tax credit carryforwards may be significantly restricted.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax asset will be realized. The ultimate realization of deferred tax assets is dependent upon the Company attaining future taxable income during periods in which those temporary differences become deductible.

Due to the uncertainty surrounding the realization of the benefits of its deferred assets, including NOL carryforwards, the Company has provided a 100% valuation allowance on its net deferred tax assets at December 31, 2021 and 2020. The changes in the valuation allowance was an increase of $4.7 million and an increase of $11.7 million for the years ended December 31, 2021 and 2020, respectively.