Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Loss before income taxes from U.S. and foreign operations were as follows:

	Year Ended December 31,
	2021		2020		2019
U.S.	$	(20,285)	$	(44,163)	$	(40,985)
Foreign	2,084		1,506		1,388
Total loss before income taxes	$	(18,201)	$	(42,657)	$	(39,597)

Total income tax expense included in the Consolidated Statements of Operations is comprised of the following:

	Year Ended December 31,
	2021		2020		2019
Current:
Federal	$	—	$	—	$	—
State	138		59		66
Foreign	1,147		781		735
Total current	$	1,285	$	840	$	801
Deferred:
Federal	$	(103)	$	81	$	(6)
State	45		32		12
Foreign	75		(42)		(14)
Total deferred	17		71		(8)
Total income tax expense	$	1,302	$	911	$	793

Total income tax expense differs from applying the statutory U.S. federal income tax rate to loss before income taxes due to permanent differences between income for tax purposes and income for book purposes, state income taxes, and foreign income taxes.

The following table reconciles our benefit of income taxes at the statutory rate to the effective tax rate, using a U.S. federal statutory tax rate of 21%:

	Year Ended December 31,
	2021		2020		2019
Tax benefit at federal statutory rate	$	(3,836)	$	(8,957)	$	(8,316)
State and local taxes, net of federal benefit	(239)		72		65
Foreign tax rate differential	207		136		98
Stock-based compensation	(22,071)		4,001		2,602
Unrealized loss on warrant liability	3,150		—		—
Nondeductible/nontaxable items	473		149		395
Unrecognized tax positions	(40)		119		257
Change in valuation allowance	21,969		5,578		5,564
GILTI	—		199		270
162(m) limitation	4,927		—		—
Warrant exercise	(3,419)		—		—
Other	181		(386)		(142)
Total income tax expense	$	1,302	$	911	$	793

The components of deferred tax assets and liabilities are as follows:

	December 31,
	2021		2020
Deferred tax assets:
Accounts receivable	$	957	$	737
Accrued expenses	154		602
Net operating loss carryforwards	44,049		23,779
Warrant liability	—		3,276
Stock-based compensation	5,513		1,573
Rent payable	499		629
Tax credit carryforwards	70		—
Other	570		121
Gross deferred tax assets	$	51,812	$	30,717
Deferred tax liability
Depreciation and amortization	$	(9,226)	$	(9,896)
Gross deferred tax liability	(9,226)		(9,896)
Less: valuation allowance	(42,919)		(20,950)
Total net deferred tax liability	$	(333)	$	(129)

As of December 31, 2021, the Company had federal net operating loss (“NOL”) carryforwards, which will begin to expire on various dates from 2033 through 2037, and state and local NOL carryforwards, which will begin to expire on various dates from 2022 through 2041.

	NOL Carryforward
	Total		1-3 Years		3-5 Years		More than 5 Years		Unlimited
Federal	$	192,055	$	—	$	—	$	47,617	$	144,438
State and local	270,350		—		1,005		230,524		38,821
Total	$	462,405	$	—	$	1,005	$	278,141	$	183,259

Certain tax attributes may be subject to an annual limitation as a result of the issuance of stock, which may constitute a change of ownership as defined under Internal Revenue Code Section 382. The Company has not performed a formal Internal Revenue Code Section 382 study to determine if an annual limitation may apply.

The Company assesses the likelihood of its ability to realize the benefit of its deferred tax assets in each jurisdiction by evaluating all relevant positive and negative evidence. A valuation allowance is established if it is determined that any portion of the deferred tax assets is not more likely than not to be realized. For the year ended December 31, 2021, the Company determined that the existence of a three-year cumulative loss incurred in its U.S. jurisdiction, inclusive of 2021, constituted sufficiently strong negative evidence to warrant the establishment of a valuation allowance. As a result, a valuation allowance of $42,919 as of December 31, 2021 has been recorded against the Company’s U.S. deferred tax assets.

The valuation allowance activity for the periods indicated is as follows:

	December 31,
	2021		2020
Balance as of the beginning of period	$	(20,950)	$	(15,372)
Additions charged to expense	(21,969)		(5,578)
Balance as of the end of period	$	(42,919)	$	(20,950)

In general, it is our practice and intention to reinvest the earnings of our non-U.S. subsidiaries in those operations. Generally, such amounts become subject to U.S. taxation upon the remittance of dividends and under certain other

circumstances. The amount of undistributed earnings of non-U.S. subsidiaries at December 31, 2021, as well as the related deferred income tax, if any, is not material.

The Company files U.S. federal income tax returns as well as various state, local, and foreign jurisdictions. As of December 31, 2021, tax years 2017 and later remain open for examination.

On December 22, 2017, the Tax Act was enacted, containing significant changes to the U.S. tax law, including lowering the U.S. corporate income tax rate to 21%, implementing a territorial tax system which includes a new federal tax on GILTI, and imposing a one-time tax on deemed repatriation of earnings of foreign subsidiaries (“transition tax”).

Effective January 1, 2018, the Company became subject to several provisions of the Tax Act including provisions impacting certain foreign income, such as tax on GILTI. The Company does not currently meet the revenue threshold for the Base Erosion and Anti-Abuse Tax (“BEAT”).

The Company has elected to treat taxes due on GILTI using the period cost method. The Company will continue to monitor the forthcoming regulations and additional guidance of the GILTI and BEAT provisions under the Tax Act, which are complex and subject to continuing regulatory interpretation by the Internal Revenue Service.

The Tax Act requires companies to pay a one-time transition tax, net of tax credits related to applicable foreign taxes paid, on previously untaxed current and accumulated earnings and profits (“E&P”) of our foreign subsidiaries. In the determination of the deemed repatriation tax, the Company reviewed post-1986 E&P, and any related non-U.S. income tax paid on such earnings. This amount is not considered to be material to our liquidity and capital resources.

ASC 740 clarifies the accounting and reporting for uncertainties in income tax law and prescribes a comprehensive model for financial statement recognition measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. ASC 740 requires that tax effects of an uncertain tax position be recognized only if it is “more likely than not” to be sustained by the taxing authority as of the reporting date.

Amounts included in the balance of unrecognized tax benefits as of December 31, 2021, 2020 and 2019, if recognized, would affect the effective tax rate upon recognition. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	Year Ended December 31,
	2021		2020		2019
Balance of unrecognized tax benefits at beginning of year	$	822	$	752	$	520
Additions based on tax positions related to the current period	—		70		340
Reductions for tax positions of prior periods	(101)		—		(108)
Balance of unrecognized tax benefits at end of year	$	721	$	822	$	752