Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

(8)       Income Taxes

Our net income tax provision, including both current and deferred, related to U.S. federal and state income taxes, is $(17). Our current federal and deferred tax expenses are zero.

A reconciliation of income tax expense to the amount computed by applying the Federal income tax rate to loss before provision for income taxes as of December 31, 2022 and 2021 is as follows:

	2022			2021
Income tax credit at statutory rates	$	(551	)	$	495
Tax exempt income - PPP loan		—			(271	)
Permanent tax deduction stock options exercised		(273	)		(63	)
State income tax, net of federal benefits		(124	)		177
Expiration of NOL & credits		1,149			899
Effect of change in deferred tax rate		69			—
Expiration of stock options		75			92
Other		(15	)		2
Change in valuation allowance		(347	)		(1,294	)
	$	(17	)		37

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 income taxes consist of the following:

	As of December 31,
	2022			2021
Deferred tax liabilities:
Excess tax depreciation	$	(253	)		—
Total deferred tax liabilities		(253	)		—
Deferred tax assets:
Net operating loss carryforwards	$	13,416		$	14,566
179 Carryforwards		117			—
163(j) Business interest limitation carryforwards		98			—
Deferred revenue		202			—
Inventory and other allowances		177			148
Excess (tax) book depreciation		—			31
Excess (tax) book amortization		59			63
174 research & experimental expenditures		480			—
Share-based compensation		394			308
Other accrued costs		238			161
Total deferred tax assets		15,181			15,277
Less:  Valuation allowance		(14,928	)		(15,277	)
Deferred income taxes	$	—		$	—

The valuation allowance decreased approximately $0.3 million and $1.3 million for the years ended December 31, 2022 and 2021, respectively (net of approximately $5.5 million and $1 million for the years ended December 31, 2022 and 2021, respectively, for expiring net operating loss carryforwards and credits) due principally to the change in the net operating loss carryforward and uncertainty as to whether future taxable income will be generated prior to the expiration of the carryforward period. Under the Internal Revenue Code, certain ownership changes, including the prior issuance of preferred stock and our public offering of common stock, may subject us to annual limitations on the utilization of our net operating loss carryforward. As of December 31, 2022, it has been determined that we are not subject to annual limitations on the utilization of our net operating loss carryforward.

We have federal net operating loss carryforwards for tax purposes of approximately $56 million on December 31, 2022. $51 million expire between 2023 and 2037. We have section 179 carryforwards of approximately $0.5M at December 31,2022. All net operating loss carryforwards generated after January 1, 2018 do not expire. Therefore, $5 million in net operating losses generated since January 1, 2018 do not expire. We have Illinois net loss deduction carryforwards for tax purposes of approximately $21 million on December 31, 2022. Due to the provisions of Illinois Public Act 102-0669 signed November 16, 2021, Illinois net loss deductions expire between 2029 and 2039.