General form of registration statement for all companies including face-amount certificate companies

Income Taxes

v3.22.4
Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes

10. Income Taxes

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

 

The following is a reconciliation of the expected statutory federal income tax provision to the actual income tax expense:

 

    2021     2020  
    December 31,  
    2021     2020  
Federal statutory rate     (21.0 )%     (21.0 )%
State taxes, net of federal benefit     (4.7 )%     (4.4 )%
Equity related expenses     (1.7 )%     (2.6 )%
Tax exempt income     (2.2 )%     - %
Change in valuation allowance     29.6 %     28.0 %
Total income tax expense     0.0 %     0.0 %

 

Significant components of the Company’s deferred tax assets and liabilities were as follows (in thousands):

    2021     2020  
    December 31,  
    2021     2020  
Deferred tax assets:                
Net operating loss carryforwards   $ 52,559     $ 50,005  
Stock-based compensation     3,006       2,929  
Federal R&D credit     2,222       2,222  
Accrued expenses     156       135  
Intangibles     216       103  
Right of use asset/liabilities     3       -  
Total deferred tax assets     58,162       55,394  
Deferred tax liabilities:                
Depreciation     (221 )     (29 )
Right of Use Asset/Liabilities     -       (11 )
                 
Total deferred tax liabilities     (221 )     (40 )
Less valuation allowance     (57,941 )     (55,354 )
Net deferred tax liability   $ -     $ -  

 

    2021     2020  
    December 31,  
    2021     2020  
             
Pre-tax book income tax at statutory rate   $ (1,843 )   $ (1,476 )
State taxes, net of federal benefit     (409 )     (312 )
Return to provision     -       1  
Equity related expenses     (146 )     (182 )
Change in valuation allowance     2,587       1,970  
Other     189       (1 )
Total income tax expense   $ -     $ -  

 

As of December 31, 2021 and 2020, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $210.7 million and $200.4 million, respectively. The federal and state net operating loss carryforwards will expire from 2023 to 2037 unless previously utilized. Additionally, the Company believes an ownership change has occurred that would trigger the limitation on usage of net operating losses imposed by Internal Revenue Code section 382. Because of this limitation, a significant portion of the net operating losses would more likely than not expire unused.

 

During the years ended December 31, 2021 and 2020, the Company recognized no amounts related to interest or penalties related to uncertain tax positions. The Company is subject to taxation in the United States and various state jurisdictions. The Company currently has no years under examination by any jurisdiction.

 

A valuation allowance has been established as realization of such deferred tax assets has not met the more likely-than-not threshold requirement. If the Company’s judgment changes and it is determined that the Company will be able to realize these deferred tax assets, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets will be accounted for as a reduction to income tax expense. The tax valuation allowance increased by approximately $2.6 million and $2.0 million for the years ended December 31, 2021 and 2020, respectively.