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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes
NOTE 14. INCOME TAXES

The components of the pretax loss from operations for the years ended December 31 are as follows (in thousands):
202120202019
U.S. Domestic(68,131)(66,482)(70,452)
Foreign(9,526)(11,721)(13,964)
Net loss before income taxes$(77,657)$(78,203)$(84,416)
The components of the provision for income taxes for the years ended December 31 is presented in the following table:

202120202019
Current:
Federal$— $— $— 
State(18)(1)(8)
Foreign(27)(4)119 
Total (provision) benefit(45)(5)111 
Deferred:
Federal— — — 
State— — — 
Foreign— — — 
Total deferred provision— — — 
Total (provision) benefit$(45)$(5)$111 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s net deferred income taxes for the years ended December 31 are as follows (in thousands):

20212020
Deferred tax assets:
Net operating loss carryforward$93,056 $81,733 
General business credit16,364 15,484 
Stock options14,851 13,366 
Intangible assets, definite-lived8,047 55 
Inventory1,790 588 
Operating lease liability734 846 
Property & equipment284 206 
Other339 284 
Total deferred tax assets135,465 112,562 
Valuation allowance(131,839)(104,585)
Deferred tax assets$3,626 $7,977 
Deferred tax liabilities:
Debt amortization$(2,933)$(7,229)
Right of use asset$(693)$(748)
Total deferred tax liabilities$(3,626)$(7,977)
Net deferred taxes$— $— 

As of December 31, 2021, the Company has generated regular tax federal net operating losses (“NOLs”) of approximately $372.1 million. As a result of the Tax and Jobs Act (the “TCJA”), for U.S. income tax purposes, NOLs generated prior to December 31, 2017 can be carried forward for up to 20 years. Of the Company's total federal net operating loss of $372.1 million, $170.6 million will begin to expire in 2023 and $201.4 million will not expire but will only offset 80% of taxable income generated in tax years after 2020.

As of December 31, 2021, the Company has generated state net operating losses of approximately $361.8 million. The Company's state net operating losses will begin to expire in 2033.
As of December 31, 2020, the Company has generated $13.5 million of federal research and development (“R&D”) tax credits which begin to expire in 2032.

As of December 31, 2020, the Company has generated $10.9 million of state R&D tax credits which begin to expire in 2032.

Pursuant to Sections 382 and 383 of the Internal Revenue Code, utilization of the Company’s NOLs and R&D tax credits may be subject to substantial annual limitation if certain ownership changes occur during a three-year testing period as defined by the Internal Revenue Code.

The net deferred tax asset valuation allowance is $131.8 million as of December 31, 2021, compared to $104.6 million as of December 31, 2020. The valuation allowance is based on management’s assessment that it is more likely than not that the Company will not have taxable income in the foreseeable future. Due to the Company's consolidated loss position, the Company maintains a valuation allowance against its deferred tax assets.

During 2018, the Company recognized $14.0 million of the initial deferred tax liability related to the 2018 convertible debt with an adjustment to equity in accordance with ASC 740. The establishment of the deferred tax liability resulted in the reduction of the Company's valuation allowance on existing deferred tax assets. The Company has recorded the reduction of the valuation allowance as an offsetting adjustment in equity. As a result, no net entry to equity was recorded for the 2018 convertible debt in 2018. Subsequent changes in the deferred tax liability related to the convertible debt would be recorded as a component of income tax expense or benefits.

The Company began commercialization of its products in Europe in 2016 and has subsidiaries in the Netherlands, France, Germany, Italy, Spain and the United Kingdom. The Company intends to treat earnings from its foreign subsidiaries as permanently reinvested.

On March 27, 2020, the United States enacted the CARES Act. The CARES Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the United States economy and fund a nationwide effort to curtail the effect of COVID-19. While the CARES Act provides sweeping tax changes in response to the COVID-19 pandemic, some of the more significant provisions are the extension of the carryback period of certain losses to five years, and the suspension of the 80 percent limitation imposed by the TCJA on utilization of NOLs generated in 2018, 2019 and 2020 to offset taxable income generated in tax years prior to 2021. The CARES Act also increased the ability to deduct interest expense from 30 percent, as imposed by the TCJA, to 50 percent of modified taxable income. The CARES Act also provides for a credit against employee wages, the opportunity to defer payment of a portion of federal payroll taxes to December 2021 and December 2022 and enhanced small business loans to assist business impacted by the pandemic. The Company’s tax provision and financial position was not materially impacted by the CARES Act.

On December 27, 2020, the United States enacted the Consolidated Appropriations Act which extended and modified many of the tax related provisions of the CARES Act. This did not have a material impact to the Company.
The difference between the U.S. federal statutory income tax rate and the Company’s effective tax rate for years ending December 31 is as follows:

12/31/202112/31/202012/31/2019
U.S. federal statutory income tax rate(21.00)%(21.00)%(21.00)%
State taxes, net of federal tax benefit(4.26)%(4.95)%(3.83)%
Permanent and other differences(9.01)%2.35 %(0.25)%
Loan forgiveness(1.31)%— %— %
Change in tax rates0.02 %(0.05)%0.16 %
Tax rate differential2.30 %3.09 %3.28 %
Unrecognized tax benefits2.64 %1.34 %0.79 %
Nondeductible equity and other compensation1.72 %(3.38)%1.12 %
Credit for increased research activities(6.19)%(6.29)%(2.80)%
Change in valuation allowance35.15 %28.89 %22.40 %
0.06 %— %(0.13)%

The Company's uncertain tax positions at December 31 as follows (in thousands):

202120202019
Balance at beginning of year$4,866 $3,712 $2,983 
Increases for prior positions2,359 — 7 
Increases for current year positions1,746 1,154 724 
Other increases— — — 
Decreases due to settlements(1,415)— — 
Expiration of the statute of limitations for the assessment of taxes— — — 
Other decreases— — (2)
Balance at end of year$7,556 $4,866 $3,712 

These uncertain positions are not expected to change within the next twelve months. Of the $7.6 million of uncertain tax positions, $0.1 million would impact the effective tax rate, if reversed. The Company accounts for interest on uncertain tax positions within tax expense. The Company's foreign subsidiaries are subject to applicable jurisdiction examination for all years of operations. The Company has adequate tax attributes available to utilize against its uncertain tax positions in a given year. As a result the Company does not accrue interest or penalties against its uncertain tax positions.

The Company incurred net operating losses since inception that are subject to adjustment under Internal Revenue Service (“IRS”) and state examination. In the first quarter of 2021, the Company was informed by the IRS that they would begin an examination of the Company’s 2018 tax year. The Company substantially completed the IRS audit of the 2018 tax year during 2021. The IRS assessed an adjustment reducing the Company's 2018 R&D tax credit. The IRS assessed an adjustment reducing the Company's 2018 NOL. The Company has removed the associated reserve for uncertain tax benefits in the current year and adjusted the deferred tax asset for the NOL and R&D credit carryforwards as a result of the audit settlement. No cash taxes, interest or penalties were paid in connection with this settlement. The Company’s foreign income tax filings are subject to examination by the appropriate foreign tax authorities. The Company is not otherwise currently under examination by tax authorities.