Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s management evaluates its tax positions to determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation, based on the technical merits of the tax position. Management has analyzed the Company’s tax positions, and concluded that, as of December 31, 2023 , 2022 and 2021 there are no uncertain tax positions taken or expected to be taken that would require recognition or disclosure in the consolidated financial statements. The Company recorded no material interest expense or penalties in its Consolidated Statements of Operations during the years ended December 31, 2023, 2022 and 2021. The Company believes it is no longer subject to examination by federal and state taxing authorities for years prior to December 31, 2020.

The components of loss from continuing operations before income taxes for the years ended December 31, 2023, 2022 and 2021 are summarized below (in thousands):

	2023			2022			2021
Pre tax book income (loss):
Domestic	$	(68,000	)	$	(95,425	)	$	(80,232	)
Foreign		(6,735	)		(6,681	)		2,774
Total pre tax book income (loss)	$	(74,735	)	$	(102,106	)	$	(77,458	)

The components of income tax expense for the years ended December 31, 2023, 2022 and 2021 are summarized below (in thousands):

	2023			2022			2021
Current expense (benefit):							`
Federal	$	28		$	(36	)	$	15
Foreign		244			490			196
State		252			179			306
Total current expense (benefit)		524			633			517
Deferred expense (benefit):
Federal		201			210			57
Foreign		(499	)		(1,078	)		—
State		300			322			150
Total deferred expense (benefit)		2			(546	)		207
Total income tax expense	$	526		$	87		$	724

The Company’s deferred tax assets (liabilities) consisted of the following at December 31, 2023 and 2022 (in thousands):

	2023			2022
Deferred tax assets:
Net operating loss carryforwards	$	84,935		$	75,965
Excess depreciation and amortization		6,679			573
Deferred compensation		7,321			5,925
Lease liability		4,279			1,238
Accruals and reserves		4,607			4,147
Total gross deferred tax asset		107,821			87,848
Less valuation allowance		(100,532	)		(84,840	)
Total net deferred tax asset		7,289			3,008
Deferred tax liabilities:
Excess depreciation and amortization		—			—
Right of use asset		(4,111	)		(1,194	)
Indefinite lived intangible		(4,838	)		(3,497	)
Net deferred tax liability	$	(1,660	)	$	(1,683	)

The Company measures deferred tax assets and liabilities using enacted tax rates that apply in the year in which the temporary differences are expected to be recovered or paid. A valuation allowance is provided for deferred tax assets (excluding certain deferred tax liabilities related to indefinite lived intangibles) if management believes that it is more likely than not that these items will either expire before the Company is able to realize their benefit or that future realizability is uncertain. The Company recorded a valuation allowance of $100.5 million and $84.8 million at December 31, 2023 and 2022, respectively against its net deferred tax assets due to the uncertainty surrounding the recoverability of such net deferred tax assets, which is an increase of $15.7 million and $20.3 million in the total valuation allowance during 2023 and 2022, respectively.

A reconciliation of income taxes at the federal statutory rate of 21% to actual income taxes for the years ended December 31, 2023, 2022 and 2021 is as follows (in thousands):

	2023			2022			2021
Income tax benefit at federal statutory rate	$	(15,718	)	$	(21,468	)	$	(16,265	)
State income taxes, net of federal income tax benefit		(2,384	)		(2,625	)		(3,789	)
Foreign rate differential		(71	)		(77	)		39
Permanent differences		594			270			(212	)
Stock based compensation		(788	)		2,203			(5,119	)
Executive compensation disallowance		4,010			1,155			1,908
Increase in valuation allowance		15,691			20,279			24,141
Canadian Research and Development Tax credits		(589	)		—			—
Other		(219	)		350			21
Provision for income taxes	$	526		$	87		$	724

For the year ended December 31, 2023, the provision for income taxes includes a non-cash tax charge of approximately $0.5 million relating to changes in the Company's long-term deferred tax liability for indefinite-lived intangibles that are not available to offset certain deferred tax assets in determining changes to the Company's income tax valuation allowance.

At December 31, 2023, the Company had US federal, state, and France net operating loss ("NOL") carryforwards for income tax purposes of approximately $331.3 million, $273.9 million and $7.1 million respectively. These carryforwards may be used to offset future taxable income, with a portion of the federal carryforwards starting to expire in 2035 and the remainder available indefinitely and an immaterial portion of state carryforwards will start to expire at various dates beginning in 2023 and the remainder expiring in future periods or available indefinitely.

Utilization of the net operating loss and credit carryforwards may be subject to an annual limitation due to the ownership limitations provided by the Internal Revenue Code of 1986, as amended (the “Code”), and similar state provisions. Any annual limitation may result in the expiration of net operating losses and credits before utilization.

At December 31, 2023, any undistributed earnings of the Company's foreign subsidiaries are considered to be indefinitely reinvested and, accordingly, no deferred taxes have been provided thereon.