Income Taxes

12 Months Ended

Dec. 31, 2023

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)	2023			2022
Domestic	$	(20,233	)	$	(14,551	)
Foreign		32			35
Loss before income taxes	$	(20,201	)	$	(14,516	)

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

(in thousands)	2023			2022
Current:
United States and state	$	—		$	—
Foreign, net		(8	)		(9	)
Deferred:
United States and state		—			—
Foreign		—			—
Total income tax expense	$	(8	)	$	(9	)

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

(in thousands)	2023			2022
Statutory federal income tax benefit	$	4,242		$	3,048
State tax benefit, net of federal taxes		531			783
Foreign tax		(1	)		(1	)
Nondeductible/nontaxable items		(694	)		548
Other		(295	)		(41	)
Valuation allowance (increase) decrease		(3,791	)		(4,346	)
Total income tax expense	$	(8	)	$	(9	)

Deferred taxes consist of the following as of December 31:

(in thousands)	2023			2022
Deferred tax assets:
Noncurrent:
Accrued leave	$	25		$	397
Stock based compensation		285			360
Net operating loss carryforward		48,818			45,405
Other		26			42
Intangibles		2,627			1,786
R&D credit carryforward		531			531
Total deferred tax assets		52,312			48,521
Less: valuation allowance		(52,312	)		(48,521	)
Total	$	—		$	—

As of December 31, 2023, the Company had federal net operating loss (“NOL”) carryforwards of approximately $212.2 million and state NOL carryforwards of $61.7 million. Approximately $119.7 million of federal NOL carryforwards will expire between 2024 and 2037. Pursuant to the Tax Cuts and Jobs Act of 2017, NOLs generated after 2017 of approximately $92.5 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. The Company does not have any foreign loss carryovers.

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, 2023 and 2022, the valuation allowance increased by $3.8 million and $4.3 million, respectively. The current year increase was primarily due to the federal and state net operating losses generated.

During 2023 and 2022, 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 carryforwards 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, 2023 or 2022.

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, 2023 and 2022, the Company recorded no accrued interest or penalties related to uncertain tax positions.

The tax years ended December 31, 2020 through December 31, 2023 remain open to examination by the Internal Revenue Service and by the various states where the Company is subject to taxation. Additionally, the returns of the Company’s Irish subsidiary are subject to examination by tax authorities for the tax years ended December 31, 2020 and subsequent years.