NOTE 13—INCOME TAXES

For the years ended December 31, 2023 and 2022, the Company recorded an income tax provision (benefit) expense of ($11) thousand and $53 thousand, respectively.

A reconciliation of income taxes at the statutory federal income tax rate to net income taxes included in the accompanying statements of operations is as follows (in thousands):

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The tax effects of temporary differences that give rise to significant components of the net deferred tax assets are as follows (in thousands):

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As of December 31, 2023, the Company had federal net operating loss carryforwards of approximately $524.8 million and state net operating loss carryforwards of approximately $35.3 million available to offset future taxable income. $286.9 million of the Company’s federal net operating loss carryforwards will begin to expire in 2025 through 2037, if not used before such time to offset future taxable income or tax liabilities. $237.9 million of the Company’s federal net operating loss has an indefinite life and will not expire. A portion of the Company’s net operating loss carryforward is subject to certain limitations on annual utilization in case of changes in ownership, as defined by federal and state tax laws. The annual limitation may result in the expiration of the net operating loss before utilization. The Company currently anticipates $253.2 million of net operating losses unutilized due to a previous Section 382 limitation.

As of December 31, 2023, the Company had federal research and development tax credits available to offset future taxes of approximately $23.9 million, which expire in the year beginning 2024, and state research and development tax credits of approximately $2.9 million, which expire beginning 2033. The Company currently anticipates $9.5 million of unutilized federal research and development tax credits to expire unutilized due to a previous Section 382 limitation.

The Company has established a valuation allowance against its deferred tax assets due to the uncertainty surrounding the realization of such assets. The valuation allowance decreased by $2.3 million from continuing operations.

The Company has no uncertain tax positions as of December 31, 2023 and 2022. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. As of December 31, 2023 and 2022, the Company had no accrued interest or penalties due to the Company’s net operating losses available to offset any tax adjustment. The Company currently has no federal or state tax examinations in progress nor has it had any federal or state tax examinations since its inception. As a result of the Company’s net operating loss carryforwards, all of its tax years are subject to federal and state tax examination.