INCOME TAXES

12 Months Ended

Dec. 31, 2023

INCOME TAXES [Abstract]

INCOME TAXES

11. INCOME TAXES

A reconciliation of income taxes at the U.S. federal statutory rate to the benefit for income taxes is as follows:

	Years Ended December 31,
	(In thousands)
	2023			2022			2021
Benefit at U.S. federal statutory rate	$	(5,930	)	$	(13,840	)	$	(15,046	)
State taxes - deferred		(763	)		(1,773	)		(252	)
Increase in valuation allowance		4,696			15,117			14,619
Research and development credits		-			(211	)		(240	)
Decrease in federal net operating loss		-			-			624
162(m) disallowance		1,183			862			64
Other		814			(155	)		231
Benefit for income taxes	$	-		$	-		$	-

A summary of the Company’s deferred tax assets is as follows:

	Year Ended December 31,
	2023			2022
Federal and state net operating loss carryforwards	$	77,757		$	81,526
Federal and state research credits		140			407
Interest expense limitation carryforwards		21,165			12,194
Transaction costs		778			882
Deferred revenue		434			480
Accrued expenses and other		1,148			1,236
Total gross deferred tax assets		101,422			96,725
Less: valuation allowance for deferred tax assets		(101,422	)		(96,725	)
Net deferred tax assets	$	-		$	-

As of December 31, 2023, the Company had federal and state (post-apportioned basis) net operating losses (“NOLs”) of $315.6 million and $216.4 million, respectively, as well as federal research and development tax credit carryforwards of approximately $0.1 million. Approximately $35.6 million and $95.1 million of the foregoing Federal and state NOLs, respectively, will expire at various dates from 2028 through 2043, if not limited by triggering events prior to such time. Under the provisions of the Internal Revenue Code, changes in ownership of the Company, in certain circumstances, would limit the amount of federal NOLs that can be utilized annually in the future to offset taxable income. In particular, Section 382 of the Internal Revenue Code (“Section 382”) imposes limitations on an entity’s ability to use NOLs upon certain changes in ownership. If the Company is limited in its ability to use its NOLs in future years in which it has taxable income, then the Company will pay more taxes than if it were otherwise able to fully utilize its NOLs. The Company may experience ownership changes in the future as a result of subsequent shifts in ownership of the Company’s capital stock that the Company cannot predict or control that could result in further limitations being placed on the Company’s ability to utilize its Federal NOLs. As of December 31, 2023, the Company performed a substantive analysis of limitations imposed by Section 382 on historical information and concluded that no ownership changes occurred as of December 31, 2023 and 2022. As part of the substantive analysis, the Company did determine that an additional $14.2 million of state NOLs were not subject to limitation of prior ownership changes and are therefore available to offset future taxable income.

A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. When determining the amount of net deferred tax assets that are more likely than not to be realized, the Company assesses all available positive and negative evidence. This evidence includes, but is not limited to, prior earnings history, expected future earnings, carry-back and carry-forward periods and the feasibility of ongoing tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. The weight given to the positive and negative evidence is commensurate with the extent the evidence may be objectively verified. As such, it is generally difficult for positive evidence regarding projected future taxable income, exclusive of reversing taxable temporary differences, to outweigh objective negative evidence of recent financial reporting losses. Based on these criteria and the relative weighting of both the positive and negative evidence available, management continues to maintain a full valuation allowance against its net deferred tax assets.

In accordance with U.S. GAAP, the Company is required to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. Derecognition of a tax benefit previously recognized could result in the Company recording a tax liability that would reduce net assets. The amount of the liability for which an exposure exists is measured as the largest amount of benefit determined on a cumulative probability basis that the Company believes is more likely than not to be realized upon ultimate settlement of the position. Components of the liability are classified as either a current or a long-term liability in the accompanying consolidated balance sheets based on when the Company expects each of the items to be settled. The Company does not have any unrecognized tax benefits as of December 31, 2023 and 2022 and does not anticipate a significant change in unrecognized tax benefits during the next 12 months.