The Company had no income tax expense for the years ended December 31, 2020, 2019 and 2018. The following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate:

	Year Ended December 31,
	2020			2019			2018
Federal tax (benefit) at statutory rate		21.0	%		21.0	%		21.0	%
State tax (benefit), net of federal benefit		9.4			6.7			5.5
Permanent differences and other		(0.0	)		(0.4	)		(0.8	)
Research and development credits		4.8			4.3			5.4
Provision to return adjustments		—			(2.8	)		—
Stock-based compensation		1.7			—			—
Change in valuation allowance		(36.9	)		(28.8	)		(31.1	)
Effective income tax rate		—	%		—	%		—	%

	December 31,
	2020			2019
Deferred tax assets:
Net operating loss carryforwards	$	38,739		$	15,650
Accrued liabilities and reserves		1,623			716
Stock-based compensation		1,434			253
Intangible assets		9,792			10,435
Operating lease liability		3,427			4,121
Research and development credits		10,471			4,991
Total deferred tax assets		65,486			36,166
Deferred tax liabilities:
Property and equipment		(269	)		(167	)
Right-of-use assets		(3,243	)		(3,956	)
Total deferred tax liabilities		(3,512	)		(4,123	)
Valuation allowance		(61,974	)		(32,043	)
Net deferred tax assets	$	—		$	—

The provisions of ASC Topic 740, Accounting for Income Taxes (ASC 740), require an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. For the years ended December 31, 2020 and 2019, based on all available objective evidence, including the existence of cumulative losses, the Company determined that it was not more likely than not that the net deferred tax assets were fully realizable. Accordingly, the Company established a full valuation allowance against its deferred tax assets. The Company intends to maintain a full valuation allowance on net deferred tax assets until sufficient positive evidence exists to support reversal of the valuation allowance. During the years ended December 31, 2020 and 2019, the valuation allowance increased by $29.9 million and $12.4 million, respectively.

At December 31, 2020, the Company had net operating loss carryforwards available to reduce future taxable income, if any, for federal and California income tax purposes of approximately $141.2 million and $129.4 million, respectively. Of the federal net operating loss carryforwards at December 31, 2020, $4.4 million begins expiring in 2030 and $136.8 million can be carried forward indefinitely, subject to an annual limitation of 80% of taxable income. The California net operating loss carryforward begins expiring in 2037.

At December 31, 2020, the Company also had federal and California research and development tax credit carryforwards of $8.3 million and $5.4 million, respectively, available to offset future income tax, if any. The federal credit carryforwards begins expiring in 2032, and the California credits can be carried forward indefinitely.

Under Section 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” the corporation's ability to use its pre-change net operating loss carryforwards and other pre-change attributes, such as research tax credits, to offset its post-change income may be limited. In general, an “ownership change” will occur if there is a cumulative change in the Company's ownership by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. Therefore, certain of the Company's carryforward tax attributes may be subject to an annual limitation regarding their utilization against taxable income in future periods. The Company has completed a Section 382 study and believes it has experienced two changes in ownership. As a result, some of the federal and California NOL carryforwards and tax credit carryforwards may expire before being applied to reduce future income tax liabilities.

In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Securities Act (CARES Act) was signed into law in the US in March 2020. The CARES Act adjusted a number of provisions in the tax code that could impact a business entity’s income taxes, including the calculation and eligibility of certain deductions and the treatment of net operating losses and tax credits. The enactment of the CARES Act did not result in any material adjustments to our income tax provision for the year ended December 31, 2020, or to our net deferred tax assets as of December 31, 2020. The CARES Act also provides for other non-income tax related benefits to assist those impacted by the COVID-19 pandemic, such as, Paycheck Protection Program loans, deferral of the employer portion of social security taxes, and employee retention credits (“ERC”). The Company elected to defer its portion of social security taxes and it claimed the Employee Retention Credit (“ERC”) as its operations were impacted by a Shelter in Place order issued by a governmental authority (Santa Clara County). The Company utilized approximately $548K of ERC’s during 2020 which will result in a cash benefit. The Company continues to monitor and evaluate the regulatory and interpretive guidance related to the CARES Act.

California Assembly Bill 85 (AB 85) was signed into law in June 2020. The legislation suspends the use of California Net Operating Loss deductions for 2020, 2021, and 2022 for certain taxpayers and imposes a limitation on the use of certain California Tax Credits for 2020, 2021, and 2022. The carryover periods for Net Operating Loss deductions disallowed by this provision will be extended. Given the Company’s net operating loss position in the current year, the new legislation will not impact the current year provision. The Company will continue to monitor possible California net operating loss and credit limitations in future periods.

The Company adopted the provisions of ASC 740, which requires companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any tax benefit can be recorded in the financial statements. It also provides guidance on the recognition, measurement, classification and interest and penalties related to uncertain tax positions.

The following table summarizes the activity related to the Company’s gross unrecognized tax benefits (in thousands):

	December 31,
	2020			2019		2018
Beginning balance	$	1,820		$	1,113	$	665
Decreases for tax positions related to prior years		(495	)		—		—
Additions for tax positions related to current year		1,104			707		448
Ending balance	$	2,429		$	1,820	$	1,113

The decrease in balance for tax positions taken in prior years relates to the completion of a research and development tax credit study for the years 2016-2019.

The unrecognized tax benefits, if recognized, would not affect the effective income tax rate due to the valuation allowance that currently offsets deferred tax assets. Interest and penalties were zero. The Company does not expect the unrecognized tax benefits to change significantly over the next twelve months.

The Company files federal and state income tax returns. All periods since inception are subject to examination by federal and state authorities, where applicable. There are currently no pending income tax examinations.