5. Income Taxes

The Company has reported net losses since inception, and therefore, the minimum provision for state income taxes has been recorded. The following table provides a reconciliation between income taxes computed at the federal statutory rate of 21% at December 31, 2021, 2020, and 2019, and the Company’s provision for income taxes.

Significant components of the Company’s deferred tax assets and liabilities from federal and state income taxes as of December 31, 2021, 2020, and 2019 are shown below (in thousands):

The Company maintains a full valuation allowance against its net deferred tax assets as realization of such assets is not more likely than not.

At December 31, 2021, 2020, and 2019, the Company had federal tax net operating loss (“NOL”) carryforwards of approximately $184.0 million, $110.8 million, and $79.4 million, respectively, as well as state tax NOL carryforwards at December 31, 2021, 2020, and 2019 of approximately $141.1 million, $84.3 million, and $53.4 million, respectively. Federal NOL carryforwards began to expire during 2021 while the Company’s state NOL carryforwards begin to expire during various years, dependent on the jurisdiction.

The Company also had federal income tax R&D and other tax credit carryforwards at December 31, 2021, 2020, and 2019 of approximately $1.4 million, $0.9 million, and $0.8 million, respectively, and state income tax R&D and other tax credits of approximately $1.3 million, $0.9 million, and $0.8 million at December 31, 2021, 2020, and 2019, respectively. The federal credit carryforwards began to expire during 2021 and the state credit carryforwards do not expire. The Company has not performed a formal study validating its federal and state R&D tax credits and upon preparation, such tax credit carryforwards could vary from what was originally claimed on applicable income tax returns.

The utilization of NOL and tax credit carryforwards to offset future taxable income may be subject to an annual limitation as a result of ownership changes that have occurred previously or may occur in the future. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, (IRC), a corporation that undergoes an ownership change may be subject to limitations on its ability to utilize its pre-change NOLs and other tax attributes otherwise available to offset future taxable income and/or tax liability. An ownership change is defined as a cumulative change of 50% or more in the ownership positions of certain stockholders during a rolling three-year period. The Company has not completed a formal study to determine if any ownership changes within the meaning of IRC Section 382 and 383 have occurred. If an ownership change has occurred, the Company’s ability to use its NOL or tax credit carryforwards may be restricted, which could require the Company to pay federal or state income taxes earlier than would be required if such limitations were not in effect.

The Company conducts intensive research and experimentation activities, generating research tax credits for federal and state purposes under IRC Section 41. The Company has not performed a formal study validating such credits claimed on its tax returns. Once a study is completed, the amount of R&D tax credits available could vary from what was originally claimed on the tax returns.

Due to the net operating loss carryforwards, the U.S. federal and state returns are open to examination for all years since inception.

The Company records uncertain tax positions on the basis of a two-step process in which it determines whether it is more likely than not tax positions will be sustained on the basis of the technical merits of the position and for those tax positions that meet the more likely than not recognition threshold the Company would recognize the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. The Company has determined it has no uncertain tax positions as of December 31, 2021, 2020, and 2019. The Company classifies interest and penalties recognized on uncertain tax positions as a component of income tax expense.

On December 27, 2020, President Trump signed into law the Consolidated Appropriations Act, 2021 (“CAA 2021”), which included a number of provisions including, but not limited to the extension of numerous employment tax credits, the extension of the

Section 179D deduction, enhanced business meals deductions, and the deductibility of expenses paid with Paycheck Protection Program (“PPP”) loan funds that are forgiven. The effects of the CAA 2021 have been incorporated into the income tax provision for the year ended December 31, 2021. These provisions did not have a material impact on the income tax provision.