Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The amount of loss before taxes from continuing operations is as follows:

	Year Ended December 31,
	2021	2020
U.S. loss before taxes	(58,928)	(88,360)
Foreign income before taxes	459	368
Loss before income taxes	(58,469)	(87,992)

The components of the provision for income taxes are presented in the following table:

	Year Ended December 31,
	2021		2020
Current:
Federal	$	—	$	(13)
State	89		170
Foreign	68		66
Total current provision	157		223
Deferred:
Federal	(2)		(80)
State	(45)		46
Foreign	(13)		(3)
Total deferred benefit	(60)		(37)
Less: (Benefit from) provision for income taxes from discontinued operations, net	—		(261)
Provision for (benefit from) income taxes from continuing operations, net	$	97	$	447

The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pretax loss as a result of the following differences:

	Year Ended December 31,
	2021		2020
United States federal tax at statutory rate	21.00	%	21.00	%
Items affecting federal income tax rate:
State tax, net of federal benefit	6.51	%	3.44	%
Valuation allowance	(37.34)	%	(23.07)	%
R&D Credit	9.47	%	—	%
NOL Expiration	(1.69)	%	(0.41)	%
Other adjustments	1.89	%	(1.47)	%
Effective income tax rate	(0.16)	%	(0.51)	%

On June 29, 2020, the state of California enacted Assembly Bill No. 85 ("AB 85") suspending California net operating loss utilization and imposing a cap on the amount of business incentive tax credits companies can utilize, effective for tax years 2020, 2021 and 2022. There was no material impact from the provisions of AB 85 for the years ended December 31, 2021 and 2020.

As of December 31, 2021 and 2020, the Company had an immaterial amount of unremitted earnings related to certain foreign subsidiaries. The Company intends to continue to reinvest its foreign earnings indefinitely and does not expect to incur any significant taxes related to such amounts.

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2021 and 2020 are as follows:

	December 31,
	2021		2020
Deferred income tax assets:
Accounts payable and accrued expenses	$	10,786	$	9,899
163(j) interest limitation	10,693		6,903
Deferred revenue	159		88
Allowance for doubtful accounts	83		92
Property, plant and equipment, net	396		1,044
Intangibles	125		95
Investments	60,185		58,779
Stock-based compensation	1,612		713
Other	—		59
Operating lease liabilities	2,249		2,565
Research and development tax credits	5,533		—
Net operating loss carryforwards	119,486		110,536
Less: Valuation allowance	(187,075)		(163,719)
Total deferred income tax assets	24,232		27,054
Deferred income tax liabilities:
State taxes	(7,867)		(6,750)
Intangible assets, net	(15,535)		(17,446)
Convertible notes	—		(1,549)
Deferred costs to obtain a customer contract	(226)		(351)
Capitalized labor costs	(344)		(520)
Other	(361)		(394)
Operating lease right-of-use assets	(1,674)		(1,897)
Total deferred income tax liabilities	(26,007)		(28,907)
Deferred income taxes, net	$	(1,775)	$	(1,853)

The realization of deferred income tax assets may be dependent on the Company’s ability to generate sufficient income in future years in the associated jurisdiction to which the deferred tax assets relate. The Company considers all available positive and negative evidence, including scheduled reversals of deferred income tax liabilities, projected future taxable income, tax planning strategies, and recent financial performance. Based on the review of all positive and negative evidence, including a three-year cumulative pre-tax loss, the Company concluded that except for the deferred tax liability recorded on amortization of certain goodwill due to its indefinite life and deferred tax liability in excess of deferred tax asset for certain separate state and city jurisdictions, it should record a full valuation allowance against all other net deferred income tax assets at December 31, 2021 and 2020 as none of these deferred income tax assets were more likely than not to be realized as of the balance sheet dates. However, the amount of the deferred income tax assets considered realizable may be adjusted if estimates of future taxable income during the carryforward period are increased or if objective negative evidence in the form of cumulative losses is no longer present. Based on the level of historical operating results the Company has recorded a valuation allowance of $187,075 and $163,719 as of December 31, 2021 and 2020, respectively. The change in the valuation allowance for the years ended December 31, 2021 and 2020 were increases of $23,356 and $10,366, respectively, which were mainly driven by losses from which the Company cannot benefit. The portion of the valuation allowance for deferred tax assets for which subsequently recognized tax benefits will be credited directly to contributed capital is $354.

As of December 31, 2021, the Company had federal and state NOL carryforwards of $451,010 and $321,735, respectively, available to offset taxable income in tax year 2022 and thereafter. Of the $451,010 in Federal NOL carryforwards, $96,949 can be carried forward indefinitely and the remaining NOL carryforwards start to expire in 2022. Of the $321,735 in state NOL carryforwards $21,799 can be carried forward indefinitely and the remaining start to expire in 2022.

As of December 31, 2021, the Company also had Federal research tax credit carryforwards of $6,700. The Federal research tax credit carryforwards expire beginning in 2037.

The Company is no longer subject to income tax examination by the U.S. federal, state or local tax authorities for years ended December 31, 2016 or prior; however, its tax attributes, such as NOL carryforwards and tax credits, are still subject to examination in the year they are used.

Federal and state laws impose restrictions on the utilization of net operating loss carryforwards and research and development credit carryforwards in the event of a change in ownership of the Company as defined by Internal Revenue Code Section 382 and 383. The Company experienced an ownership change in the past that impacts the availability of its net operating losses and tax credits. The amounts indicated in the above tables reflect the reduction of net operating losses and credit carryforwards as a result of previous ownership changes that the Company experienced. Should there be additional ownership changes in the future, the Company's ability to utilize existing carryforwards could be substantially restricted.

A summary of changes to the amount of unrecognized tax benefits is as follows:

	2021
Unrecognized tax benefits as of December 31, 2020	$	—
Increases related to prior year tax positions taken during the current year	1,037
Increases related to current year tax positions taken during the current year	86
Unrecognized tax benefits as of December 31, 2021	$	1,123

The Company records a tax benefit from uncertain tax positions only if it is more likely than not the tax position will be sustained with the taxing authority having full knowledge of all relevant information. The Company records a reduction to deferred tax assets for unrecognized tax benefits from uncertain tax positions as discrete tax adjustments in the first period that the more-likely-than-not threshold is not met. As of December 31, 2020, the Company did not record any unrecognized tax benefits in its financial statements. For the year ended December 31, 2021, the Company recorded unrecognized tax benefits of $1,123 related to Federal Research and Development tax credits recognized in 2021.

The reversal of the uncertain tax benefits would not affect the effective tax rate to the extent that the Company continues to maintain a full valuation allowance against its deferred tax assets. The Company does not anticipate any significant changes to unrecognized tax benefits over the next 12 months. The Company has not incurred any material interest or penalties as of the current reporting period with respect to income tax matters.

The Company’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2021 and 2020, there were no material interest and penalties associated with unrecognized tax benefits recorded in the Company's Consolidated Statements of Operations or Consolidated Balance Sheets. Any changes to unrecognized tax benefits recorded as of December 31, 2021 that are reasonably possible to occur within the next 12 months are not expected to be material.