Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Note 15. Income Taxes

As of December 31, 2022, the Company has U.S. federal net operating loss (“NOL”) carryforwards of approximately $458 million and foreign NOL carryforwards of $7.8 million. U.S. federal NOLs amounting to $60 million generated before the 2018 tax year will start expiring beginning 2032, and the NOL of approximately $398 million generated in 2018 and later have an indefinite carryforward period. The NOL carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. NOL carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, as well as similar state tax provisions. This could limit the amount of NOLs that the Company can utilize annually to offset future taxable income or tax liabilities.

The components of the Company’s deferred tax assets and deferred tax liabilities are as follows:

	December 31, 2022			December 31, 2021
Deferred tax assets:
Net federal operating loss carryforward	$	96,156,250		$	76,470,431
Net foreign operating loss carryforward		2,794,785			88,480
Net state operating loss carryforward		32,029,378			47,672,157
Non-cash compensation		11,027,745			13,228,425
Research and development credits		15,015,642			14,455,797
Interest Expense		318,798			4,117,655
Intangible Assets		10,422,110			—
Accrued expenses		2,113,054			1,479,728
Section 174 Capitalization		14,540,848			—
Other		109,988			219,760
Deferred tax asset, excluding valuation allowance		184,528,598			157,732,433
Deferred tax liabilities:
Lease Asset		(104,001	)		(224,958	)
Deferred tax liability, excluding valuation allowance		(104,001	)		(224,958	)
Less valuation allowance		(184,424,597	)		(157,507,475	)
Net deferred tax assets	$	—		$	—

A valuation allowance is provided for deferred tax assets where the recoverability of the assets is uncertain. The determination to provide a valuation allowance is dependent upon the assessment of whether it is more likely than not that sufficient future taxable income will be generated to utilize the deferred tax assets. Based on the weight of the available evidence, which includes the Company’s historical operating losses and forecast of future losses, the Company provided a full valuation allowance against the deferred tax assets resulting from the tax loss and credits carried forward. The valuation allowance increased $26.9 million, $49.6 million, and $39.7 million, in 2022, 2021, and 2020, respectively, as a result of the increase of the deferred tax assets.

There was no income tax expense (benefit) recorded by the Company due to its net loss tax position and full valuation allowance during the years ended December 31, 2022, 2021, and 2020. A reconciliation of income tax expense (benefit) at the statutory federal income tax rate and income taxes as reflected in the consolidated financial statements is as follows:

	December 31, 2022			December 31, 2021			December 31, 2020
U.S. federal statutory income tax rate		21.0	%		21.0	%		21.0	%
State taxes, net of federal benefit		4.5			14.0			13.7
Foreign Rate Differential		1.2			—			—
Stock based compensation - Excess tax benefit		1.0			1.8			1.8
Other permanent differences		(0.3	)		(0.1	)		(0.6	)
Tax credit		(0.6	)		1.3			2.5
Deferred tax adjustment		(2.9	)		—			—
Change in valuation allowance		(23.9	)		(38.0	)		(38.4	)
Effective tax rate		—	%		—	%		—	%

The Company is not currently under examination at the federal or state levels and as of the date of the consolidated financial statements, there were no known assessments. The Company’s U.S. federal and state net operating losses have occurred since its inception in 2012 and as such, tax years subject to potential tax examination could apply from that date because the utilization of net operating losses from prior years opens the relevant year to audit by the IRS and/or state taxing authorities.

The Company has elected to account for GILTI in the period in which it is incurred, and therefore has not provided deferred tax impacts of GILTI in its Consolidated Financial Statements.