INCOME TAXES

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The components of income tax expense (benefit) were as follows:

	Twelve Months Ended December 31,
	2021		2020
(amounts in thousands)			(As Restated)
Current expense
Federal	$	3,945	$	—
State	1,807		23
Total current expense	$	5,752	$	23
Deferred expense (benefit)
Federal	$	(1,676)	$	(3,047)
State	(1,130)		(835)
Change in valuation allowance	2,806		3,882
Total deferred expense (benefit)	$	—	$	—
Total income tax expense	$	5,752	$	23

Effective tax rates differ from the federal statutory rate of 21% due to the following:

	Twelve months ended December 31,
	2021				2020
					(As Restated)
(amounts in thousands)	Amount		% of pretax income		Amount		% of pretax income
Federal income tax at statutory rate	$	4,788	21.00	%	$	(2,560)	21.00	%
State taxes, net of federal benefit	216		1.83	%	(580)		4.75	%
Change in fair value of warrant liabilities	(3,617)		(15.87)	%	—		—	%
Change in valuation allowance	2,806		11.43	%	3,882		(31.84)	%
Nondeductible compensation	1,532		5.97	%	—		—	%
Tax credits	—		—	%	(873)		7.16	%
Other	27		0.88	%	154		(1.26)	%
Total	$	5,752	25.24	%	$	23	(0.19)	%

At December 31, 2021 and 2020, the Company had no ASC 740-10 unrecognized tax benefits. The Company does not expect the total amount of unrecognized tax benefits to significantly increase within the next twelve months. The Company recognizes interest and penalties on unrecognized tax benefits in Other expense.

Realization of deferred tax assets is dependent upon the generation of future taxable income or the existence of sufficient taxable income within the carry back period. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. In assessing the need for a valuation allowance, management considered the scheduled reversal of the deferred tax liabilities, the level of historical income, and the projected future taxable income over the periods in which the temporary difference comprising the deferred tax assets will be deductible. Based on its assessment, management determined that a full valuation allowance is necessary at December 31, 2021 and 2020. The deferred tax asset for the basis difference in the acquired assets and corresponding valuation allowance was recorded through equity.

There are zero loss or credit carryforwards as of December 31, 2021. As of December 31, 2020, the Company had $55.6 million of federal net operating loss carryforwards, $28.1 million of state net operating loss carryforwards, and $2.7 million of research and development (R&D) credit carryforwards. The merger was treated as a taxable asset acquisition under applicable tax law; as such, the net operating losses and credit carryforwards, including the recorded deferred taxes associated with these tax attributes, were not available to the Company after the merger. The deferred tax attributes as of December 31, 2020 are presented on a separate company return basis, while the Company was a subsidiary of another consolidated group.

Deferred income taxes reflect temporary differences in the recognition of revenue and expenses for tax reporting and financial statement purposes, principally because certain items are recognized in different periods for financial reporting and tax return purposes.

The following represents the Company's deferred tax assets and liabilities as of December 31, 2021 and 2020:

	December 31, 2021		December 31, 2020
(amounts in thousands)			(As Restated)
Deferred tax assets:
Net operating losses and credit carryforwards	$	—	$	16,431
Deferred income	788		1,226
Section 197 Intangibles	27,581		1,226
Operating lease liability	—		296
Equity based compensation	1,521		—
Accrued bonuses	125		—
Other	24		143
Less: Valuation Allowance	(29,662)		(13,689)
Total deferred tax assets	$	377	$	5,633
Deferred tax liabilities
Depreciation	(377)		(5,243)
Operating lease ROU asset	—		(318)
Other	—		(72)
Total deferred tax liabilities	$	(377)	$	(5,633)
Net deferred tax asset (liability)	$	—	$	—

The Company is subject to income tax examinations by federal, state, and local taxing authorities for tax periods ended after December 31, 2017.