Income Taxes

6 Months Ended

Jun. 30, 2022

Income Taxes [Abstract]

Income Taxes

Note 3 — Income Taxes

For the three months ended June 30, 2022, we recognized income tax expense of $373 on loss before taxes of $4,064, which is an effective tax rate of 9.18%. For the six months ended June 30, 2022, we recognized an income tax benefit of $684 on loss before taxes of $8,441, which is an effective rate of 8.10%. The effective tax rate was lower than the statutory federal income tax rate primarily due to the effect of stock-based compensation and expiring options, requiring us to reduce our deferred tax asset. During the six months ended June 30, 2022, our deferred tax asset increased by $685 to $16,635.

On May 13, 2022, the Company notified the public of the restatement via Form 8-K stating the Company's previously issued 2021 Financials because of an error in our deferred tax assets affecting the annual period covered by the financial statements. The Company determined that the three and six months ended June 30, 2021 interim statements should be revised as the 2021 restatement related primarily to options expiring in second quarter 2021. The accompanying Deferred tax asset previously reported as $16,854 has now been reduced to $13,526 as of June 30, 2021. The income tax benefit for the three months ended June 30, 2021, previously reported as $609 has been corrected to income tax expense of $2,719. The income tax benefit for the six months ended June 30, 2021, previously reported as $7,802 has been reduced to $4,474.

For the three months ended June 30, 2021, we recognized an income tax expense of $2,719 on loss before taxes of $4,132. Income tax for the three months was primarily affected by expiring options and net operating loss. For the six months ended June 30, 2021, we recognized an income tax benefit of $4,474 on loss before income taxes of $37,768. Income tax for the six months was primarily affected by expiring options and research and development credits. During the six months ended June 30, 2021 , our deferred tax asset increased by $4,477 to $13,526.

A valuation allowance is provided for deferred tax assets when, in our judgment, based upon currently available information and other factors, it is more likely than not that all or a portion of such deferred income tax assets will not be realized. The determination of the need for a valuation allowance is based on an on-going evaluation of current information including, among other things, historical operating results, estimates of future earnings in different taxing jurisdictions and the expected timing of the reversals of temporary differences. We believe the determination to record, or reduce, a valuation allowance associated with a deferred income tax asset is a significant accounting estimate because it is based, among other things, on an estimate of future taxable income in the United States and certain other jurisdictions, which is susceptible to change and may or may not occur, and because the impact of adjusting a valuation allowance may be material. In determining when to release the valuation allowance established against our net deferred income tax assets, we consider all available evidence, both positive and negative.

Our tax years for 2005 and forward are subject to examination by the U.S. tax authority and various state tax authorities. These years are open due to NOLs, and tax credits generated in these years were utilized in 2020. The statute of limitation for these years shall expire three years after the date of filing 2020 income tax returns.

We are required to recognize the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. At December 31, 2021 and June 30, 2022, we have no uncertain tax positions. Our policy is to recognize interest and penalties accrued on uncertain tax positions as a component of income tax expense. We had no accrued interest or penalties related to uncertain tax positions at June 30, 2022.