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INCOME AND OTHER TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME AND OTHER TAXES INCOME AND OTHER TAXES
Income Taxes
Loss before provision for income taxes for the years ended December 31, 2023 and December 31, 2022 consists of the following:

Year Ended December 31,

20232022
U.S. loss
$(23,267)$(59,153)
Foreign income (loss)—(69)
Total current$(23,267)$(59,222)
The major components of income tax expense attributable to loss from operations consists of:

Year Ended December 31,

20232022
Current:
Federal
$—$—
State
9(87)
Foreign
—(4)
Total current$9$(91)
Deferred:


Federal
(520)—
State
(18)—
Foreign
——
Total deferred(538)—
Total income tax (expense) benefit
$(529)$(91)
Income tax expense attributable to loss from continuing operations for the years ended December 31, 2023 and 2022 differed from the amounts computed by applying the U.S. federal income tax rates of 21.0%, as a result of the following:
Year Ended December 31,
 20232022
U.S. federal statutory tax rate21.0%21.0%
State taxes, net of federal benefit4.8%3.3%
Share based compensation(2.5)%(2.0)%
Change in fair value of financial instruments and other8.2%(2.7)%
Disallowed convertible debt expense(4.9)%0.2%
Change in valuation allowance(1)
(34.7)%(24.8)%
R&D credit2.1%0.7%
Rate change3.4%(0.3)%
Prior year true up—%5.2%
Other, net0.2%(0.7)%
Effective tax rate
(2.3)%(0.2)%
(1)During the year ended December 31, 2023 and 2022, the Company maintained a full valuation allowance on its deferred tax assets.
The Coronavirus Aid, Relief and Economic Security ("CARES") Act and miscellaneous other income taxes receivable result in total income taxes receivable as of December 31, 2021 of $10,764. During the year ended December 31, 2022, the Company received $10,841 from the Internal Revenue Service ("IRS") which was the remaining amount of the income taxes receivable and interest.
The components of deferred tax assets and liabilities are as follows:

December 31,

20232022
Deferred tax assets:
Net operating loss and other carryforwards
$69,747$53,997
Inventory provision and UNICAP 263A
1,1398,079
Lease liability4,5584,972
Section 174 capitalized costs3,6381,733
Share-based compensation
756976
Other
1,9182,061
Total deferred tax assets
$81,756 $71,818 
Valuation allowance
(75,644)(67,582)
Total deferred tax assets, net
$6,112$4,236

Deferred tax liabilities:
Right of use assets(3,716)(4,063)
Investment in unconsolidated entity(2,800)—
Warrants(134)(173)
Total deferred tax liabilities
$(6,650)$(4,236)

Net deferred taxes$(538)$—
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 continues to believe its deferred tax assets are not more-likely-than-not to be realized and, as such, a full valuation allowance is recorded against net deferred taxes. For the years ended December 31, 2023 and 2022, the Company’s valuation allowance increased by $8,062 and $14,694, respectively, primarily related to the incremental net operating losses and an increase to the inventory provision.
As of December 31, 2023, the Company has US federal, US state, and Canadian net operating losses of approximately $251,290, $209,282, and $10,687 respectively. The entire US federal NOLs are post-2017 NOL and therefore can be carried forward indefinitely and the US state NOLs will begin to expire in 2030. The Canada NOLs will begin to expire in 2039. For the year ended December 31, 2023 and 2022, the Company also has a research and development credit carryforward of $2,791 and $2,205, respectively, which begin to expire in 2040.
Tax 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 may have experienced ownership changes in the past that impact the availability of its net operating losses and tax credits. Should there be additional ownership changes in the future, the Company's ability to utilize existing carryforwards could be substantially restricted.
Uncertain tax positions
A reconciliation of the beginning and ending amount of uncertain tax positions as of December 31, 2023 and 2022 is as follows:
Balance at December 31, 2022$221 
Additions for current year tax positions49 
Additions for prior year tax positions9 
Reductions for prior year tax positions— 
Reductions as a result of settlement with tax authority— 
Balance at December 31, 2023$279 
Balance at December 31, 2021$179 
Additions for current year tax positions40 
Additions for prior year tax positions2 
Reductions for prior year tax positions— 
Reductions as a result of settlement with tax authority— 
Balance at December 31, 2022$221 
The Company recognizes the tax benefit from an uncertain tax position only if it is probable that the tax position will be sustained based on its technical merits. The Company measures and records the tax benefits from such a position based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company’s estimated liabilities related to these matters are adjusted in the period in which the uncertain tax position is effectively settled, the statute of limitations for examination expires or when additional information becomes available. The Company’s liability for unrecognized tax benefits requires the use of assumptions and significant judgment to estimate the exposures associated with the Company's various filing positions. Although the Company believes that the judgments and estimates made are reasonable, actual results could differ and resulting adjustments could materially affect the Company's effective income tax rate and income tax provision. The Company’s policy is to recognize interest and penalties on taxes, if any, as income tax expense.
If recognized, none of the uncertain tax positions would affect the effective tax rate. The Company does not anticipate any significant changes to the uncertain tax positions in the next twelve months.
The Company files income tax returns in the U.S. federal, various state jurisdictions, Canada, and Israel. In the normal course of business, it is subject to examination by taxing authorities throughout the world. As of December 31, 2023, the Company’s tax years prior to 2019 are closed for federal income tax purposes. The Company’s 2019 tax year was opened for examination by the IRS during the second half of 2023. The statute of limitations on assessment with respect to the Company’s 2019 Form 1120 remains open until December 31, 2025, pursuant to an agreed-upon extension to the applicable statute of limitations. The Company’s 2020 through 2022 tax years remain open until the general statute of limitations lapses for each respective tax year.
Other Taxes
Employee Retention Credit
As of December 31, 2022, the Company qualified for federal government assistance through employee retention credit ("ERC") provisions of the Consolidated Appropriations Act of 2021. Management recorded the ERC benefit of $4,106 for the year ended December 31, 2022 as an offset to Selling, general and administrative expense. During the year ended December 31, 2023, the company received $4,261, which includes $155 of interest income, related to the ERC.