From inception through December 31, 2016, the Company was a Limited Liability Company treated as a “pass-through” for federal and state income tax purposes, and therefore, all items of income or loss through December 31, 2016 flowed through to the members of the LLC. Effective January 1, 2017, the Company converted from an LLC to a C-corporation for federal and state income tax purposes. Prior to the conversion to a C-corporation, the Company did not record deferred tax assets or liabilities or have any net operating loss (“NOL”) carryforwards for federal income tax purposes. Effective upon the conversion to a C-corporation, the Company became subject to income tax at the federal and state levels.

We did not record a current or deferred income tax expense or benefit for the years ended December 31, 2019 and 2018 due to the Valuation Allowance position. A reconciliation of income tax expense (benefit) computed at the statutory federal and state income tax rate for the year to income tax expense (benefit) as reflected in our financial statements for years ended December 31, 2019 and 2018 are as follows (in thousands):

	December 31,			December 31,
	2019			2018
Federal income tax expense (benefit) at statutory rate	$	(4,008	)	$	(2,287	)
Change in valuation allowance		6,471			2,296
State income tax expense net of federal benefit		(1,522	)		(913	)
Prior period adjustment		(110	)		852
Credits		(604	)		(143	)
Other non-deductible expenses		(223	)		189
Other		(4	)		6
Total tax expense (benefit)	$	—		$	—

The significant components of the Company’s deferred tax assets as of December 31, 2019 and 2018 are as follows (in thousands):

	December 31,			December 31,
	2019			2018
Deferred tax assets:
Net operating loss carryforwards	$	9,934		$	4,262
Stock compensation		140			77
Lease liability		945			—
Accrued expenses		144			123
Credits		820			143
Total deferred tax assets		11,983			4,605
Valuation allowance		(10,931	)		(4,460	)
Deferred tax assets		1,052			145
Deferred tax liabilities:
Depreciation		(3	)		(42	)
Right-of-use asset		(785	)		—
Prepaid expenses		(261	)		(102	)
Unrealized loss on marketable securities		(3	)		(1	)
Total deferred tax liabilities		(1,052	)		(145	)
Net deferred tax assets	$	—		$	—

The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Based on the Company’s history of operating losses, the Company has concluded that it is more likely than not that the benefit of its deferred tax assets will not be realized. Accordingly, the Company has provided a full valuation allowance for deferred tax assets as of December 31, 2019.

As of December 31, 2019, the Company had cumulative US federal NOL carryforwards of approximately $34.3 million. Of this amount, $5 million is available to offset future income tax liabilities and will expire in 2037, the remaining $29.3 million is available indefinitely to offset future income tax liabilities with no expiration period.

Under the provisions of the Internal Revenue Code, the NOL carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. NOL carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Internal Revenue Code 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. The Company has completed several financings since its inception which may have resulted in a change in control as defined by Sections 382 and 383 of the Internal Revenue Code, or could result in a change in control in the future.

The Company files income tax returns in the United States at the federal level and in states in which the Company conducts business activities. The federal and state income tax returns are generally subject to tax examinations for the tax year ended December 31, 2017 and 2018. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service or state tax authorities to the extent utilized in a future period.