Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE 12: INCOME TAXES

A reconciliation of the income tax benefit calculated at the federal statutory rate to total income tax provision is as follows (in thousands):

	Year Ended December 31,
	2023			2022
Expected federal income tax benefit	$	(6,320	)	$	(5,662	)
Disallowed R&D expenses		9			351
Non-taxable R&D rebate		(7	)		(156	)
Other permanent items		738			214
Return to provision		47			862
Stock-based compensation		682			213
Foreign rate differential		(453	)		(270	)
Other		(2	)		27
Effect of change in valuation allowance		5,306			4,421
Income tax benefit	$	—		$	—

The following table summarizes the significant components of the Company's deferred tax assets and liabilities (in thousands):

	As of December 31,
	2023			2022
Deferred tax assets
Accrued bonus	$	238		$	222
Accrued vacation		50			47
Stock-based compensation		4,203			4,067
Capitalized R&D expenses		5,788			3,155
Rebate reserve		303			—
Intangible assets, net		248			315
Investment in equity securities		628			—
Net operating loss carryforwards		13,276			11,522
Other		6			—
Total gross deferred tax asset		24,740			19,328
Valuation allowance		(24,646	)		(19,327	)
Net deferred tax assets		94			1
Deferred tax liabilities
Section 481(a) adjustment - bonus compensation		(94	)		—
Fixed assets		—			(1	)
Net deferred tax assets	$	—		$	—

As of December 31, 2023 and 2022, a valuation allowance was established against the Company's net deferred tax assets due to the uncertainty regarding the realization of such assets and evidenced by the cumulative losses from operations through December 31, 2023 and 2022. The total valuation allowance increased by $5.4 million for the year ended December 31, 2023.

The Company has incurred net operating losses since inception. At December 31, 2023, the Company had domestic federal net operating loss carryforwards of $106.7 million and foreign net operating loss carryforwards of $1.6 million. Federal net operating loss carryforwards generated through December 31, 2017 expire at various dates beginning 2029 through 2038, while Federal net operating loss carryforwards generated during or after 2018 do not expire. Foreign net operating losses do not expire.

The future utilization of the Federal net operating loss carryforwards to offset future taxable income, may be subject to an annual limitation as a result of ownership changes that may have occurred previously or may occur in the future. The Tax Reform Act of 1986 (the Act) limits a Company's ability to utilize certain net operating loss carry forwards in the event of a cumulative change in ownership in excess of 50% (by value) defined in the act. The Company has not completed a study to assess whether an ownership change, as defined by the Act, had occurred from the Company's formation through December 31, 2023.

In previous years, the Company completed public offerings, which it believes triggered ownership changes under Section 382 of the Act. The Company believes that as of December 31, 2023, the gross net operating loss carryforward is limited to $60.9 million, which are available to reduce future taxable income.

The Company files income tax returns in the U.S. and Australia. The Company has not been audited for any open taxation years. The Company is subject to federal tax examinations for 2017 and beyond for the U.S. operations and 2019 and beyond for Australia operations.

The Company has no unrecognized tax positions as of December 31, 2023 or 2022 and does not believe there will be any material changes in its unrecognized tax positions over the next 12 months. The Company has not incurred any interest or penalties related to unrecognized tax positions for the years ended December 31, 2023 or 2022.