Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes 

The components of the pretax loss from operations for the years ended December 31, 2021 and 2020 are as follows (in thousands):

	Years Ended December 31,
	2021			2020
U.S. Domestic	$	(8,268	)	$	(8,373	)
Foreign		-			-
Pretax loss from operations	$	(8,268	)	$	(8,373	)

The provision for income taxes from continuing operations for the years ended December 31, 2021 and 2020 are as follows:

	Years Ended December 31,
	2021		2020
Current	$		$
Federal		-		-
State		-		-
Foreign		-		-
Total current		-		-
Deferred
Federal		-		-
State		-		-
Foreign		-		-
Total deferred		-		-
Total income tax expense (benefit)	$	-	$	-

Tax Rate Reconciliation

A reconciliation of income taxes to the amount computed by applying the statutory federal income tax rate to the net loss is summarized as follows :

	Years Ended December 31,
	2021			2020
Income tax benefit at statutory rates	$	(1,736	)	$	(1,758	)
State income tax, net of federal benefit		(329	)		(309	)
Permanent items		-			1
Stock-based compensation		118			84
PPP loan forgiveness		(137	)		-
Change in rate		-			-
Stock compensation DTA adjustment		-			-
Change in valuation allowance		1,976			1,982
RTP and other		109			-
Income tax expense (benefit)	$	-		$	-

Significant components of our deferred tax assets as of December 31, 2021 and 2020 are shown below.

A valuation allowance has been recognized to offset the net deferred tax assets as realization of such deferred tax assets have not met the more likely than not threshold.

	December 31,
	2021			2020
Deferred tax assets:
ASC 842 leases	$	130		$	167
Federal and state net operating loss carryovers		19,448			17,548
Stock-Based Compensation		333			289
Compensation accruals and other		139			84
Depreciation		-			17
Total deferred tax assets		20,050			18,105
Valuation allowance for deferred tax assets		(19,916	)		(17,940	)
Deferred tax assets, net of valuation allowance		134			165
Deferred tax liabilities:
Depreciation		(7	)		-
ASC 842 assets		(127	)		(165
Total deferred tax liabilities		(134	)		(165	)
	$	-		$	-

At December 31, 2021, we had federal and state net operating loss carryforwards of approximately $77.2 million and $63.7 million, respectively, not considering the IRC Section 382 annual limitation discussed below. The federal loss carryforwards begin to expire in 2029, unless previously utilized. In addition, we had approximately $32.7 million of the total $77.2 million of net operating losses that do not expire, as these losses were generated after the law change introduced as part of the Tax Cuts and Jobs Act. The state net operating losses expire if not utilized by 2041.

Additionally, the utilization of the net operating loss carryforwards could be subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code of 1986, and similar state tax provisions due to ownership change limitations that have occurred previously or that could occur in the future. These ownership changes limit the amount of net operating loss carryforwards and other deferred tax assets that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382 and 383, results from transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percentage points over a three-year period. We have not conducted an analysis of an ownership change under section 382. To the extent that a study is completed and an ownership change is deemed to occur, our net operating losses could be limited.

The following table summarizes the activity related to our gross unrecognized tax benefits at the beginning and end of the years ended December 31, 2021 and 2020 (in thousands):

	Years Ended December 31,
	2021		2020
Gross unrecognized tax benefits at the beginning of the year	$	-	$	-
Increases related to current year positions		-		-
Increases related to prior year positions		-		-
Decreases related to prior year positions		-		-
Expiration of unrecognized tax benefits		-		-
Gross unrecognized tax benefits at the end of the year	$	-	$	-

None of the unrecognized tax benefits would affect our annual effective tax rate.

We do not expect a significant change in unrecognized tax benefits over the next 12 months.

We file income tax returns in the United States and Arizona with general statutes of limitations of three and four years, respectively. Due to net operating losses incurred, our tax returns from inception to date are subject to examination by taxing authorities. Our policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. As of December 31, 2021, we had no interest or penalties accrued for uncertain tax positions.