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INCOME TAXES
 12 Months Ended
Dec. 31, 2022
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, 2022December 31, 2021
Tax benefit at statutory rate$(5,244)$(2,038)
Stock based compensation207 780 
Offering issuance costs and changes in fair value of warrants and private placement option(413)(3,176)
Change in valuation allowance6,066 4,718 
Research and development credit(585)(288)
Other(29)4 
Income tax expense$2 $— 

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, 2022 and 2021 are as follows:

(in thousands)December 31, 2022December 31, 2021
Deferred tax assets (liabilities):
      Net operating loss carryforward$104,707 $100,346 
      Stock compensation3,838 3,541 
      Intangible assets6,096 7,156 
      Section 174 expenses, net of amortization1,639 — 
      Research and development credit18,661 18,076 
      Other63 (144)
Total deferred tax assets, net of deferred tax liabilities135,004 128,975 
      Valuation allowance(135,004)(128,975)
Net deferred tax$— $— 

Net operating loss carryforwards and research tax credits as of December 31, 2022 and 2021 are as follows:
(in thousands)December 31, 2022December 31, 2021
U.S. federal income tax net operating loss carryforwards$498,607 $477,839 
U.K. net operating loss carryforwards$— $— 
U.S. federal research tax credits$13,569 $12,985 
Texas research tax credits$5,091 $5,091 
The Company has $277.4 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 $18.7 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, 2022 and 2021. The changes in the valuation allowance were an increase of $6.0 million and an increase of $4.7 million for the years ended December 31, 2022 and 2021, respectively.
The Internal Revenue Code Section 174 requires that taxpayers capitalize and amortize R&D expenses that were previously eligible for immediate expensing, for tax years commencing after January 1, 2022. Under the Code, expenses incurred within the U.S. will be amortized over a five-year period beginning with the midpoint of the year in which the expenses were paid or incurred. The expenses that are required to be capitalized will include both the qualified expenses that go into calculating the R&D tax credit and the indirect costs that can be attributed to R&D activities. For the year ended December 31, 2022, the estimated Section 174 expenses, net of amortization, are $1.6 million.