Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

14. Income Taxes

We have not recorded income tax benefits for the net operating losses incurred during the years ended December 31, 2021 and 2020 or for research and development tax credits or other deferred tax assets due to uncertainty of realizing benefits from these items.

The components of income (loss) before income taxes for the years ended December 31, 2021 and 2020 was as follows:

(in thousands)	2021			2020
United States	$	(6,269	)	$	(18,985	)
Foreign		(3,899	)		114
Loss before provision for income taxes	$	(10,168	)	$	(18,871	)

Income tax expense (benefit) for the years ended December 31, 2021 and 2020 was as follows:

(in thousands)	2021			2020
Current tax expense (benefit):
Federal	$	—		$	—
State		—			—
Foreign		(146	)		146
Total current tax expense (benefit)		(146	)		146
Deferred tax expense (benefit):
Federal		—			—
State		—			—
Foreign		(282	)		260
Total deferred tax expense (benefit)		(282	)		260
Total income tax expense (benefit)	$	(428	)	$	406

A reconciliation of income tax computed at the U.S. federal statutory rate of 21% to expense for income taxes for the years ended December 31, 2021 and 2020 was as follows:

(in thousands)	2021			2020
Income tax expense (benefit) at federal statutory rate	$	(2,135	)	$	(3,963	)
State income taxes (net of federal benefit)		(1,690	)		(917	)
Change in fair value of common stock warrant liability		(206	)		3,069
Change in fair value of contingent earn-outs		(7,884	)		(2,966	)
Research and development tax credits		(640	)		(425	)
Stock compensation		(462	)		147
Foreign rate differential		(157	)		7
Other		625			88
Change in valuation allowance		12,121			5,366
Income tax expense (benefit)	$	(428	)	$	406

Our effective tax rate was 4.21% and (2.15)% during the years ended December 31, 2021 and 2020, respectively. Significant components of deferred tax assets (liabilities) as of December 31, 2021 and 2020 were as follows:

(in thousands)	2021			2020
Deferred tax assets (liabilities):
Net operating loss carryforwards	$	26,898		$	17,958
Depreciation and amortization		1,478			1,810
Research and development credits		2,594			1,682
Lease liability		1,158			520
Right-of-use asset		(798	)		(270	)
Accrued interest		—			160
Non-qualified stock options and restricted stock awards		2,815			146
Accrued compensation		74			115
Other		19			(260	)
Total deferred tax assets (liabilities)		34,238			21,861
Less: valuation allowance		(34,238	)		(22,121	)
Net deferred tax assets (liabilities)	$	—		$	(260	)

In assessing the realizability of deferred tax assets, we consider whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, carry back opportunities and tax planning strategies in making the assessment. We believe it is more likely than not that we will not realize the benefits of these deductible differences and have applied a full valuation allowance against them.

We have federal and state net operating losses (“NOLs”) of approximately $110.1 million and $77.1 million as of December 31, 2021, respectively that, subject to limitation, may be available in future tax years to offset taxable income. Of the available federal NOLs, approximately $76.7 million can be carried forward indefinitely but utilization is limited to 80% of our taxable income in any given tax year based on current federal tax laws. The remaining balance of $33.4 million will begin to expire after 2034. Of the available state NOLs, approximately $64.2 million can be carried forward indefinitely but utilization is limited to 80% of our taxable income in any given tax year based on current tax laws. The remaining balance of $12.9 million will begin to expire after 2032. Additionally, we have approximately $2.6 million of research and development credit carryforwards that will begin to expire after 2034 if not utilized.

Under the provisions of Section 382 of the Internal Revenue Code of 1986, substantial changes in our ownership may result in limitations on the amount of NOL carryforwards and research and development credits that can be utilized in future years. NOL carryforwards and research and development credits are subject to examination in the year they are utilized regardless of whether the tax year in which they are generated has been closed by statute. The amount subject to disallowance is limited to the amount utilized. Accordingly, we may be subject to examination for prior NOLs and credits generated as such tax attributes are utilized.

We have not recorded any amounts for unrecognized tax benefits as of December 31, 2021 and 2020. We recognize interest and penalties related to income tax matters in income tax expense. We have no accrual of interest and penalties on the consolidated balance sheets and have not recognized interest and penalties in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2021 and 2020.

We are subject to taxation in the United States, Australia, Netherlands, and various state jurisdictions. Our tax returns from 2014 to present are subject to examination by the United States and state authorities due to the carry forward of unutilized net operating losses and research and development credits. There are currently no pending examinations.