Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

14. Income Taxes

Federal and State income tax expense is as follows:

	For the Years Ended December 31,
	2021			2020
Current
Federal	$	-		$	-
State		-			-
Total current		-			-
Deferred
Federal		(8,918	)		(6,211	)
State		4,294			(2,439	)
Total deferred		(4,624	)		(8,650	)
Change in valuation allowance		4,624			8,650
Total income tax expense (benefit)	$	-		$	-

Deferred income taxes, if applicable, are provided for the differences between the basis of assets and liabilities for financial reporting and income tax purposes.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets are as follows:

	As of December 31,
	2021			2020
Deferred tax assets:
Net operating loss carry forwards	$	23,350		$	19,371
Stock option expense		920			443
Research and development credits		1,551			70
Operating lease liability		1,564			330
RSU expense		1,960			1,796
Other		7			10
Total deferred tax assets		29,352			22,020
Valuation allowance		(27,803	)		(21,698	)
Deferred tax assets, net of valuation allowance		1,549			322
Deferred tax liabilities:
Operating right-of-use asset		(1,549	)		(322	)
Total deferred tax liabilities		(1,549	)		(322	)
Deferred tax assets, net of valuation allowance and deferred tax liabilities	$	-		$	-

A reconciliation of the provision for income taxes with the amounts computed by applying the statutory Federal income tax to income before provision for income taxes is as follows:

	For the Years Ended December 31,
	2021			2020
U.S. federal statutory rate		(21.0	)%		(21.0	)%
State taxes, net of federal benefit		(0.6	)%		(9.4	)%
Research and development credits		(3.3	)%		-	%
Option expense		1.1	%		1.2	%
Other		1.2	%		1.9	%
True-up to prior years return		8.2	%		1.8	%
State rate change		1.5	%		-	%
Change in valuation allowance		12.9	%		25.5	%
Effective tax rate		-	%		-	%

For the year ended December 31, 2020, the Company’s effective tax rate was 0%, which consisted principally of a federal rate of 21% and the Company’s estimate of state taxes, net of federal benefit, of 9.4%, offset by a valuation allowance 25.5%. For the year ended December 31, 2021, the Company’s effective tax rate was 0%, which consisted principally of a federal rate of 21%, and the Company’s estimate of state taxes, net of federal benefit, of 0.6%, offset by a valuation allowance 12.9% and true-up to the prior years tax return of 8.2%.

As of December 31, 2021 for U.S. federal and state income tax reporting purposes, the Company has approximately $100.2 million and $29.6 million, respectively, of unused net operating losses (“NOLs”) available for carry forward to future years. As a result of the Tax Cuts and Jobs Act of 2017 (“TCJA”), for U.S. income tax purposes, NOLs generated in tax years beginning before January 1, 2018 can still be carried forward for up to 20 years, but net operating losses generated for tax years beginning after December 31, 2017 carryforward indefinitely and can be used to offset taxable income. Of the total Federal NOL, $0.6 million can be carried forward until 2037; and $99.6 million can be carried forward indefinitely. The New York state and city NOLs may be carried forward through the year 2041 and may be applied against future taxable income. Further, the benefit from utilization of NOL carry forwards could be subject to limitations due to material ownership changes that could occur as the Company continues to issue additional shares of common stock pursuant to its capital raising plans. Based on such limitations, the Company has significant NOLs for which realization of tax benefits is uncertain. The Company has not performed a study to determine whether or not there is such a limitation.

The Company remains subject to examination by tax authorities for all tax years.

Based on a history of cumulative losses at the Company and the results of operations for the years ended December 31, 2021 and 2020, the Company determined that it is more likely than not that it will not realize benefits from the net deferred tax assets. The Company will not record income tax benefits in the financial statements until it is determined that it is more likely than not that the Company will generate sufficient taxable income to realize the deferred income tax assets. As a result of the analysis, the Company determined that a full valuation allowance against the deferred tax assets, net, was required. As of December 31, 2021 and 2020, the Company has recorded a valuation allowance of $27.8 million and $21.7 million, respectively.

As of December 31, 2021 and 2020, management does not believe that the Company has any material uncertain tax positions that would require it to measure and reflect the potential lack of sustainability of a position on audit in its consolidated financial statements. The Company will continue to evaluate its uncertain tax positions in future periods to determine if measurement and recognition in its financial statements is necessary. The Company does not believe there will be any material changes in its unrecognized tax positions over the next year.