Annual report pursuant to Section 13 and 15(d)

Income Taxes

Income Taxes
12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes

Note 8. Income Taxes


The components of loss before income taxes from continuing operations consist of the following.


    2022     2021  
United States   $ (15,807 )   $ (18,575 )
Foreign     -       -  
Total loss before income taxes   $ (15,807 )   $ (18,575 )


The Company did not record any current, deferred, or net income tax expense (benefit) from continuing operations in 2022 or 2021. Total income tax expense (benefit) from continuing operations differed from the amounts computed by applying the U.S. federal income tax rate of 21% to pretax income as a result of the following for the years ended December 31:


    2022     2021  
Computed “expected” tax expense   $ (3,219 )   $ (3,901)  
Deferred rate change     (132 )     84  
State taxes, net of federal tax effect     (822 )     (752)  
Non-deductible transaction costs     -       222  
Non-deductible interest     2       664  
R&D tax credit     238     (238)  
Sale of vivoPharm business     (72 )        
Other, net     117       (51)  
Change in valuation allowance     3,888       3,972  
Income tax expense (benefit)   $ -     $ -  



The tax effects of temporary differences from continuing operations that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below as of December 31: 


    2022     2021  
Deferred tax assets                
Accrued liabilities   $ 109     $ 47  
Capitalized R&D costs     3,233       1,931  
Intangibles     107       127  
Fixed assets     2       -  
Stock compensation     248       160  
Lease liability     478       170  
Loss carryforward     20,750       18,144  
Tax credit carryforward     1,085       1,406  
Other temporary differences     3       4  
Total gross deferred tax assets     26,015       21,989  
Valuation allowance     (25,614 )     (21,807 )
Total deferred tax assets   $ 401     $ 182  
Deferred tax liabilities                
Fixed assets   $ -   $ (17 )
Lease assets     (401 )     (165 )
Total gross deferred tax liabilities   $


)   $ (182 )
Net deferred tax asset   $ -     $ -  


The Company assessed that the valuation allowance against its deferred tax assets is still appropriate as of December 31, 2022 and 2021, based on the consideration of all available positive and negative evidence using the “more likely than not” standard required when accounting for income taxes.


Under the Code, certain corporate stock transactions into which the Company has entered or may enter in the future could limit the amount of the net operating loss carryforwards that can be utilized in future periods. The Company has completed a review of historical stock transactions, as well as the current stock transactions completed in conjunction with the Merger and concluded our federal net operating loss and R&D credit carryforwards are subject to limitations under Section 382 and 383 of the Internal Revenue Code. As of December 31, 2022, the Company has federal net operating loss carryforwards of $78.3 million. Of this amount, $11.9 million relate to losses originating in tax years beginning prior to January 1, 2018 and expire between 2026 and 2037. The federal net operating losses of $66.4 million generated in tax years beginning on or after December 31, 2017 do not expire.


On August 9, 2022, the Creating Helpful Incentives to Produce Semiconductors (“CHIPS”) Act was signed into law creating a new advanced manufacturing investment credit under new Internal Revenue Code section 48D. On August 16, 2022, the Inflation Reduction Act (IRA) was signed into law, which, among other changes, created a new corporate alternative minimum tax (AMT) based on adjusted financial statement income and imposes a 1% excise tax on corporate stock repurchases. The effective date of these provisions is January 1, 2023. The CHIPS Act and IRA did not have a material impact on the Company’s financial statements for the year-ended December 31, 2022.


As of December 31, 2022 and 2021, the Company had no liability for unrecognized tax benefits recorded in continued operations. The Company does not expect the liability for unrecognized tax benefits to change in the next twelve months.


The Company has elected to classify tax-related accrued interest and penalties as a component of income tax expense.


The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. As of December 31, 2022, the Company was no longer subject to income tax examinations for taxable years before 2019 in the case of U.S. federal taxing authorities, and taxable years generally before 2018 in the case of state and local taxing jurisdictions.