Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 9– INCOME TAXES

The provision for income taxes consists of the following components:

		December 31, 2021		December 31, 2020
Current expense (benefit)	$	-	$	-
Federal		-		-
Foreign		-		-
Current income tax expense		-		-
Deferred expense (benefit)		-		-
Federal		-		-
Foreign		-		-
Deferred income tax		-		-
Net deferred taxes	$	-	$	-

A reconciliation of income tax benefit computed using the federal statutory income tax rate to the Company’s tax expense is as follows:

(in thousands, except percentage)	December 31, 2021			December 31, 2020
Federal tax benefit at statutory rate (21%)	$	(6,381	)	$	(2,541	)
Stock-based compensation		1,156			599
State income tax benefit, net of federal tax effect		(519	)		(411	)
Foreign tax differential		(41	)		(61	)
Research credits		2,372			742
Other		2			1
Return to provision adjustment		166			33
Change in valuation allowance		3,245			1,638
Income tax benefit	$	-		$	-

The principal components of deferred tax assets and liabilities consist of the following at December 31, 2021 and 2020, respectively:

(in thousands)	December 31, 2021			December 31, 2020
Deferred tax assets
Stock-based compensation	$	934		$	563
Federal NOL carryforwards		3,702			2,202
Foreign NOL carryforwards		2,156			782
Total deferred tax assets		6,792			3,547
Less valuation allowance		(6,792	)		(3,547	)
Net deferred tax assets	$	-		$	-

At December 31, 2021, the Company had a federal net operating loss carryforward of approximately $15.7 million. The net operating loss carryforwards for 2017 will begin to expire in the year ending December 31, 2037. The net operating loss carryforwards starting in 2018 have no expiration.

The Company’s gross deferred tax assets of $6.8 million and $3.5 million at December 31, 2021 and 2020, respectively, primarily consist of net operating loss carryforwards for income tax purposes. A valuation allowance is required to be recorded when it is not more likely than not that some portion or all of the net deferred tax assets will be realized. Since the Company cannot be assured of generating taxable income and thereby realizing the net deferred tax assets, a full valuation allowance has been recorded. The change in the valuation allowance was $3,245,000 during the year ended December 31, 2021.

The Company recognizes uncertain tax positions in accordance with ASC 740 on the basis of evaluating whether it is more likely than not that the tax positions will be sustained upon examination by tax authorities. For those tax positions that meet the more-likely-than not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement. As of December 31, 2021, and 2020, the Company has no significant uncertain tax positions. There are no unrecognized tax benefits included on the balance sheet that would, if recognized, impact the effective tax rate. The Company does not anticipate there will be a significant change in unrecognized tax benefits within the next 12 months.