Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

7. Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets (liabilities) as of December 31, 2021 and 2020 are as follows (in thousands): 

	December 31
	2021			2020
Net operating loss carryforwards	$	22,497		$	19,965
Net operating loss carryforwards of foreign subsidiaries		56			374
Depreciation expense		(94	)		(99	)
Stock-based compensation expense		52			53
Other		544			304
Net deferred tax assets		23,055			20,597
Valuation allowance for net deferred tax assets		(23,055	)		(20,597	)
Net deferred tax assets, net of allowance	$	–		$	–

Deferred tax assets are required to be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. Realization of the future benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate taxable income within the near to medium term. Management has considered these factors in determining the valuation allowance for 2021 and 2020.

The differences between the provision for income taxes and income taxes computed using the federal statutory rate for the years ended December 31, 2021 and 2020 are as follows (in thousands): 

	2021			2020
Reconciliation of income tax benefit to statutory rate:
Income benefit at statutory rate	$	(3,948	)	$	(1,369	)
State income taxes (benefit), net of federal income tax benefit		(331	)		(121	)
Permanent differences		(206	)		60
Change in valuation allowance		2,458			1,425
Other		2,027			5
Income tax provision	$	–		$	–

At December 31, 2021, we had federal net operating loss carryforwards of approximately $107.1 million for income tax purposes that begin to expire in 2022 and are subject to the ownership change limitations under Internal Revenue Code Section 382.