Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

(8) Income Taxes

The provision for income tax consists of the following:

	Year Ended December 31,
	2021		2020		2019
Federal	$	11	$	12	$	9
State		10		10		9
Foreign		—		11		16
Total income tax (benefit) expense	$	21	$	33	$	34

Actual income tax expense differs from that obtained by applying the statutory federal income tax rate of 21% in 2021, 2020, and 2019, respectively, to income before income taxes as follows: (in thousands):

	Year Ended December 31,
	2021			2020			2019
Tax at federal statutory rate	$	(13,124	)	$	(18,882	)	$	(22,424	)
State, net of federal benefit		(770	)		(2,372	)		(2,109	)
PPP loan forgiveness		(1,397	)		—			—
Permanent items		606			2,282			857
Benefit state rate change		(184	)		20			337
Other		8,499			2,984			368
Goodwill impairment		—			—			1,602
Change in valuation allowance		6,391			16,001			21,403
	$	21		$	33		$	34

The tax effects of temporary differences and carryforwards that give rise to significant portions of the deferred tax assets and liabilities are as follows (in thousands):

	December 31,
	2021			2020
Net operating loss carryforwards	$	122,570		$	113,374
Research and development credits		2,121			2,121
Lease liabilities		1,798			1,861
Derivative liability		—			6,495
Accruals and reserves		14,961			10,175
Intangibles		1,732			3,053
		143,182			137,079
Less valuation allowance		(137,700	)		(131,309	)
Total deferred tax assets	$	5,482		$	5,770
Depreciation	$	(717	)	$	(276	)
Convertible debt discount		(2,800	)		(3,440	)
Right-of-use assets		(1,624	)		(1,793	)
Intangibles - deferred tax liability		(434	)		(333	)
Total deferred tax liabilities		(5,575	)		(5,842	)
Net deferred taxes	$	(93	)	$	(72	)

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. Generally, the ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible. Based on all the relevant factors, a valuation allowance of $137.7 million has been established against deferred tax assets as of December 31, 2021 as management determined that it is more likely than not that sufficient taxable income will not be generated to realize these temporary differences.

As of December 31, 2021, the Company had net operating loss carryforwards of approximately $483.1 million and $330.1 million available to reduce future taxable income, if any, for federal and state income tax purposes, respectively. Federal net operating loss carryforwards of $9.8 million begins expiring in 2027, and state net operating loss carryforwards of $8.3 million began expiring in 2017. It is possible that the Company will not generate taxable income in time to use these NOLs before their expiration. In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an “ownership change ”, the corporation's ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. In general, an “ownership change” occurs if there is a cumulative change in a loss corporation’s ownership by 5% shareholders that exceeds 50 percentage points over a rolling three-year period.

As of December 31, 2021, the Company had research and development credit carryforwards of approximately $30,000 and $2.7 million available to reduce future taxable income, income, if any, for federal and California state income tax purposes, respectively. The federal credit carryforwards begin expiring in 2029 and the state credits carryforward indefinitely.

At December 31, 2021, the Company had unrecognized tax benefits of approximately $0.6 million associated with the research and development credits. The Company does not anticipate that total unrecognized net tax benefits will significantly change over the next twelve months.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

Ending balance at December 31, 2019	$	1,116
Additions based on tax positions taken in the current year		10
Decreases based on tax positions taken in a prior year		(507	)
Ending balance at December 31, 2020		619
Additions based on tax positions taken in the current year		—
Ending balance at December 31, 2021	$	619

It is the Company’s policy to include penalties and interest expense related to income taxes as a component of other (income) expense and interest expense, respectively, as necessary. There was no interest expense or penalties related to unrecognized tax benefits recorded through December 31, 2021.

The Company files U.S. federal and state income tax returns in jurisdictions with varying statute of limitations. In general, the Company’s federal tax returns for 2018 to 2020 and state tax returns for 2017 to 2020 remain open for examination by the federal and state tax authorities, including net operating loss carryforwards to those years.