Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes [Abstract]

Income Taxes

Note 7—Income Taxes

Domestic and foreign income (loss) before income taxes, consists of the following for the years ended December 31:

(in thousands)	2021			2020
Domestic	$	(19,606	)	$	(15,865	)
Foreign		37			38
Loss before income taxes	$	(19,569	)	$	(15,827	)

The components of income tax expense consist of the following for the years ended December 31:

(in thousands)	2021			2020
Current:
United States and state	$	—		$	—
Foreign, net		(9	)		(9	)
Deferred:
United States and state		—			—
Foreign		—			—
Total income tax expense	$	(9	)	$	(9	)

Actual income tax expense differs from statutory federal income tax expense as follows for the years ended December 31:

(in thousands)	2021			2020
Statutory federal income tax benefit	$	4,109		$	3,324
State tax benefit, net of federal taxes		560			94
Foreign tax		(1	)		(1	)
Foreign deferred exchange rate adjustments		—			1,027
Dissolution of foreign subsidiary		—			(11,401	)
Nondeductible/nontaxable items		(220	)		34
Other		406			(255	)
Valuation allowance (increase) decrease		(4,863	)		7,169
Total income tax expense	$	(9	)	$	(9	)

Deferred taxes consist of the following as of December 31:

(in thousands)	2021			2020
Deferred tax assets:
Noncurrent:
Accrued leave	$	59		$	61
Stock based compensation		368			293
Net operating loss carryforward		42,363			37,665
Other		131			11
Intangibles		723			751
R&D credit carryforward		531			531
Total deferred tax assets		44,175			39,312
Less: valuation allowance		(44,175	)		(39,312	)
Total	$	—		$	—

As of December 31, 2021, the Company had federal net operating loss (“NOL”) carryforwards of approximately $186.4 million and state NOL carryforwards of $44.4 million. Approximately $120.1 million of federal NOL carryforwards will expire between 2025 and 2038. Pursuant to the Tax Cuts and Jobs Act of 2017, NOLs generated after 2017 of approximately $66.3 million do not expire.  The expiration of state NOL carryforwards will vary by jurisdiction. In addition, future utilization of NOL carryforwards in the U.S. may be subject to certain limitations under Section 382 of the Internal Revenue Code. As of December 31, 2020, the Company no longer has tax loss carryforwards in the Commonwealth of Australia due to the dissolution of the subsidiary in November 2020.

The Company provides for a valuation allowance when it is more likely than not that it will not realize a portion of the deferred tax assets. The Company has established a valuation allowance for U.S. and foreign deferred tax assets due to the uncertainty that enough taxable income will be generated in those taxing jurisdictions to utilize the assets. Therefore, the Company has not reflected any benefit of such deferred tax assets in the accompanying consolidated financial statements. For the years ended December 31, 2021, and 2020, the valuation allowance increased by $4.9 million and decreased by $7.2 million, respectively.  The current year increase was primarily due to the Federal and state net operating losses generated.

During 2018, 2019, 2020 and 2021, the Company believes it experienced an ownership change as defined in Section 382 of the Internal Revenue Code which will limit the ability to utilize the Company’s net operating losses (NOLs). The Company may have experienced additional ownership changes in earlier years further limiting the NOL carry-forwards that may be utilized. The Company has not yet completed a formal Section 382 analysis. The general limitation rules allow the Company to utilize its NOLs subject to an annual limitation that is determined by multiplying the federal long-term tax-exempt rate by the Company’s value immediately before the ownership change.

The accounting guidance related to uncertain tax positions prescribes a recognition threshold and measurement attribute for recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.  The Company had no material uncertain tax positions as of December 31, 2021 or 2020.

The Company recognizes interest and penalties on unrecognized tax benefits as well as interest received from favorable tax settlements within income tax expense.  At December 31, 2021 and 2020, the Company recorded no accrued interest or penalties related to uncertain tax positions.

The tax years ended December 31, 2018 through December 31, 2021 remain open to examination by the Internal Revenue Service and for the various states where the Company is subject to taxation. Additionally, the returns of the Company’s Australian (through November 2020) and Irish subsidiaries are subject to examination by tax authorities of those jurisdictions for the tax years ended and subsequent to June 30, 2016 and December 31, 2016, respectively.