N.	Income Taxes

The Company

’s financial statements include a total state tax benefit related to research and development credits of

$22,000

and

$126,000

on a loss before income taxes of approximately

$24.2

million and

$56.6

million for the years ended

December 31, 2019

and

2018

, respectively. A reconciliation of the difference between the benefit for income taxes and income taxes at the statutory U.S. federal income tax rate is as follows (in thousands, except amounts pertaining to rate which are shown as a percentage):

	Year ended December 31,
	2019			2018
Federal statutory rate		21.00			21.00
Effect of:
Change in valuation allowance		(28.52	)		(30.44	)
Return to provision and deferred true-up		-			0.38
Change in rate		(0.33	)		0.03
State tax benefit (net of federal)		3.39			4.35
Warrant liability		1.71			2.02
State research and development credit		0.09			0.22
Federal research and development credit		1.44			3.30
Amortization		(0.29	)		-
Stock-based compensation		(1.10	)		(0.63	)
Other		2.70			(0.01	)
Federal income tax provision effective rate		0.09			0.22

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

	December 31,
	2019			2018
Deferred tax assets relating to:
Net operating loss carryforwards	$	56,827		$	51,269
Research and development tax carryforward		6,411			5,657
Other deferred tax assets		4,488			3,437
Total gross deferred tax assets		67,726			60,363
Deferred tax liabilities relating to:
Property and equipment		-			161
Other deferred tax liabilities		540			10
Total gross deferred tax liabilities		540			171
Deferred tax assets less liabilities		67,186			60,192
Valuation allowance		(67,186	)		(60,192	)
Net deferred tax asset (liability)	$	-		$	-

In assessing the realizability of deferred tax assets, management considers whether it is more likely than

not

that some portion or all of the deferred tax assets will

not

be realized. The ultimate realization of deferred tax

assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than

not

that the Company will

not

realize the benefits of these deductible differences in the future.

The Company had the following federal net operating loss carryforward and research activities credits as of

December 31, 2019

(

in thousands):

	Net Operating		Research
Year Incurred	Loss CF		Activities Cr.		Expiration
2007	$	454	$	30		2027
2008		1,178		65		2028
2009		3,060		176		2029
2010		3,423		149		2030
2011		9,929		176		2031
2012		-		170		2032
2013		4,353		133		2033
2014		15,897		894		2034
2015		23,496		598		2035
2016		41,580		745		2036
2017		34,776		652		2037
2018		56,155		2,272	Indefinite
2019		22,784		352	Indefinite
	$	217,085	$	6,412

The Company also has certain state net operating loss carryforwards totaling

$136.0

million that expire between

2027

and

2037.

Due to potential ownership changes that

may

have occurred or would occur in the future, Internal Revenue Code Section

382

may

place additional l

imitations on the Company’s ability to utilize the net operating loss carryforward.

ASC

740

10,

Accounting for Uncertainty in Income Taxes

, uses the term “more likely than

not”

to evaluate whether or

not

a tax position will be sustained upon examination. The Company has

not

identified any tax positions that do

not

meet the more likely than

not

threshold.