Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.24.1
Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income (loss) before income taxes by tax jurisdiction were as follows:
Year Ended December 31,
2023 2022
United States $(20,812) $(25,426)
Foreign 1,786 1,088
Loss before income tax expense $(19,026) $(24,338)

Income tax expense for the years ended December 31, 2023, and 2022, consisted entirely of current tax expense as follows:
Current: 2023 2022
Federal $— $—
State — —
Foreign 145 111
Income tax expense $145 $111
A reconciliation of the Company's effective tax rate to the statutory federal income tax rate is as follows:
December 31,
Rate reconciliation: 2023 2022
Federal tax benefit at statutory rate (21.0) % (21.0) %
State tax, net of federal benefit (6.1) % (4.9) %
Permanent differences 1.7  % 1.5  %
Research & development credits (3.8) % (2.0) %
Foreign rate differential (1.2  %) —  %
Change in tax rate (0.5  %) 0.1  %
Other (0.7  %) (5.8  %)
Change in valuation allowance 32.4  % 32.5  %
Effective tax rate 0.8  % 0.4  %
Deferred tax assets and liabilities consisted of the following:
December 31,
2023 2022
Deferred tax assets:
   Net operating losses $ 42,899  $ 40,397 
   Capitalized research and development costs 3,876  1,598 
   Credits 2,066  1,347 
   Accruals and other 934  492 
   Share-based compensation 657  467 
   Lease liabilities 533  482 
   Fixed assets 86  82 
Total deferred tax assets 51,051  44,865 
Valuation allowance (50,595) (44,454)
Deferred tax assets, net of valuation allowance $ 456  $ 411 
Deferred tax liability:    
   Right-of-use assets (456) (411)
Net deferred tax assets $ —  $ — 
Based on all available evidence on a jurisdictional basis, the Company believes that it is more likely than not that its U.S. deferred tax assets will not be utilized and has recorded a full valuation allowance against its net deferred tax assets in the U.S. jurisdiction. The Company assesses on a periodic basis the likelihood that it will be able to recover its deferred tax assets. The Company considers all available evidence, both positive and negative, including historical levels of income or losses and expectations and risks associated with estimates of future taxable income in assessing the need for the valuation allowance. If it is not more likely than not that the Company expects to recover its deferred tax assets, the Company will increase its provision for taxes by recording a valuation allowance against the deferred tax assets that it estimates will not ultimately be recoverable. The available negative evidence at December 31, 2023 and 2022 included historical and projected future operating losses. Accordingly, a full valuation allowance has been recorded against the Company’s net deferred tax assets as of December 31, 2023 and 2022. The valuation allowance increased by $6.1 million and $7.9 million during the years ended December 31, 2023 and 2022, respectively.
The Company did not have unrecognized tax benefits as of December 31, 2023 or 2022. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.
The Company had net operating loss carryforwards (“NOL”) for federal and state income tax purposes of $167.4 million and $120.1 million at December 31, 2023, respectively. The net operating loss carryforwards generated prior to 2018 begin expiring in 2033 for federal and 2030 for state income tax purposes. Federal and many state net operating losses generated in 2018 and thereafter have an indefinite life.
The Company had federal and state research and development credit carryforwards of $1.3 million and $1.0 million at December 31, 2023, respectively. The federal credit carryforwards begin expiring in 2038 and the state credits can be carryforward indefinitely .
The NOL and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. NOL and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. To date, the Company has not performed an analysis to determine whether or not ownership changes have occurred since inception.
The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company’s 2018 to 2022 tax years remain open and subject to examination; carryforward amounts from all tax years remain subject to adjustment.