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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The components of net loss before income tax for continuing operations (comprised of the total of loss before income tax and equity in net loss of investee and equity in net income (loss) of investee, net of tax) for the years ended December 31, 2024, 2023 and 2022 are as follows (in thousands):
Year Ended December 31,
202420232022
Domestic$(72,417)$(73,419)$(86,190)
Foreign— — — 
Total$(72,417)$(73,419)$(86,190)
The Company’s income tax benefit for continuing operations for the years ended December 31, 2024, 2023 and 2022 are as follows (in thousands):
Year Ended December 31,
202420232022
Current:
Federal$— $— $— 
State— — — 
Foreign— — — 
Total current income tax benefit
— — — 
Deferred:
Federal— — (256)
State— — — 
Foreign— — — 
Total deferred income tax benefit— — (256)
Income tax benefit$— $— $(256)
A reconciliation between income tax benefit and the expected tax benefit at the statutory rate for the years ended December 31, 2024, 2023 and 2022 are as follows:
Year Ended December 31,
202420232022
Federal statutory rate21.0 %21.0 %21.0 %
State taxes, net of federal benefit
4.3 %0.4 %3.0 %
Permanent differences(0.1)%0.8 %— %
Non-deductible compensation(14.6)%(1.3)%— %
Change in valuation allowance(17.6)%(15.6)%(24.6)%
Share based liabilities7.0 %(4.5)%— %
Other items— %(0.8)%0.9 %
Effective tax rate— %— %0.3 %
The significant components of the Company’s deferred tax liabilities, net consist of the following at December 31, 2024 and 2023 (in thousands):
December 31, 2024December 31, 2023
Deferred tax assets:
Net operating losses
$48,552 $37,833 
Share based liabilities— 543 
Accruals and reserves1,082 1,079 
Lease liability
892 206 
Investment in joint venture— 2,075 
Stock compensation337 656 
Interest expense limitation carryforward
5,665 — 
Gross deferred tax assets56,528 42,392 
Valuation allowance(53,705)(40,948)
Deferred tax assets, net2,823 1,444 
Deferred tax liabilities:
Lease right-of-use asset
(880)(182)
Property, plant and equipment(1,943)(1,262)
Gross deferred tax liabilities(2,823)(1,444)
Deferred tax liabilities, net$— $— 
ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2024 and 2023, the Company estimated a portion of its deferred tax assets will be utilized to offset the Company’s deferred tax liabilities. Based upon the level of historical U.S. losses and future projections over the period in which the net deferred tax assets are deductible, at this time, management believes it is more likely than not that the Company will not realize the benefits of the remaining deductible temporary differences, and as a result the Company has recorded a valuation allowance as of December 31, 2024 and 2023, for the amount of deferred tax assets that will not be realized. The increase in the December 31, 2024 valuation allowance of $12.8 million is primarily attributable to the current year net loss.
As of December 31, 2024 and, 2023, for federal income tax purposes the Company had total net operating loss carryforwards of approximately $211.1 million and $172.4 million, respectively. As of December 31, 2024, the net operating losses will have an indefinite carryforward as a result of the Tax Cuts and Jobs Act, but may be limited in utilization to 80% of taxable income. For state income tax purposes, as of December 31, 2024 and 2023 the Company had state net operating loss carryforwards of approximately $65.3 million and $30.8 million, respectively, which begin to expire in 2041.
As of December 31, 2024 and 2023, the Company did not have any available federal or state research and development tax credit carryforwards.
Under the provisions of the Internal Revenue Code, the net operating loss carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. The Company has not completed a formal study to conclude whether an annual limitation may exist. Net operating loss carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years.
The Company follows the provisions of ASC 740 which specifies how tax benefits for uncertain tax positions are to be recognized, measured, and recorded in the consolidated financial statements; requires certain disclosures of uncertain tax matters; specifies how reserves for uncertain tax positions should be classified on the consolidated balance sheet; and provides transition and interim period guidance, among other provisions. As of December 31, 2024 and 2023, the Company had not recorded any long-term liabilities for uncertain tax positions. The Company’s policy is to recognize interest and penalties accrued on any uncertain tax positions as a component of income tax expense, if any, in its consolidated statements of operations. For the years ended December 31, 2024 and 2023, no estimated interest or penalties were recognized on uncertain tax positions.
The Company files income tax returns in the U.S. federal tax jurisdiction and various state jurisdictions. Since the Company is in a loss carryforward position, the Company is generally subject to examination by the U.S. federal, state and local income tax authorities for all years in which a loss carryforward is available. The statute of limitations for assessment by federal and state tax jurisdictions in which the Company has business operations is open for the tax year ended December 31, 2024. The tax years subject to examination vary by jurisdiction.