Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Note 17. Income Taxes

Net deferred income tax assets consist of the following components as of December 31, 2022 and 2021:

(Amounts in thousands)	2022		2021
Deferred tax assets (liabilities):
Net operating loss carryforwards	$	70,296	$	29,985
Tax credit carryforwards	1,643		1,840
Reserves	3,352		1,258
Share-based compensation	2,843		730
Allowance for impairment of eNow Convertible Note	—		701
Depreciation and amortization	(19,109)		229
Interest expense carryforward	8,697		—
Right of use assets/liabilities	179		—
Other	1,452		185
Total deferred tax assets, net	69,353		34,928
Less valuation allowance	(69,353)		(34,928)
Net deferred tax assets (liabilities)	$	—	$	—

A reconciliation of the provision for income taxes with the amounts computed by applying the statutory Federal income tax to income before provision for income taxes is as follows:

	For the Years Ended December 31,
	2022		2021
U.S. federal statutory rate	21.0	%	21.0	%
State taxes, net of federal benefit	4.9	%	2.4	%
Change in fair value of warrant liability	1.6	%	(73.6)	%
Option and RSU expense	0.2	%	4.5	%
Other	(1.5)	%	0.7	%
True-up to prior years return	0.8	%	3.2	%
Change in valuation allowance	(37.1)	%	41.8	%
Purchase accounting	10.1	%	—	%
Effective tax rate	—	%	—	%

The Company utilizes an asset and liability approach for financial accounting and reporting for income taxes. The provision for income taxes is based upon income or loss after adjustment for those permanent items that are not considered in the determination of taxable income. Deferred income taxes represent the tax effects of differences between the financial reporting and tax basis of the Company’s assets and liabilities at the enacted tax rates in effect for the years in which the differences are expected to reverse.

The Company evaluates the recoverability of deferred tax assets and establishes a valuation allowance when it is more likely than not that some portion or all the deferred tax assets will not be realized. Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In Management’s opinion, adequate provisions for income taxes have been made. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.

Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. For the years ended December 31, 2022 and 2021, no liability for unrecognized tax benefits was required to be reported.

The Company has provided a full valuation allowance against its net deferred tax assets since realization of any future benefit from deductible temporary differences and net operating loss cannot be sufficiently assured. Management of the Company has evaluated the positive and negative evidence bearing upon the reliability of its deferred tax assets, which are comprised principally of net operating loss carryforwards and research and development credits. Under the applicable accounting standards, Management has considered the Company’s history of losses and concluded that it is more likely than not that the Company will not recognize the benefits of federal and state deferred tax assets. During the year ended December 31, 2022 and 2021, the Company increased its valuation allowance by $34.4 million and $12.0 million, respectively.

As of December 31, 2022, the Company has federal and state net operating loss carryforwards of $279.8 million and $206.7 million, respectively, approximately $42.1 million of the federal net operating loss carryforward will expire at various dates commencing on 2029 and through 2037 and approximately $237.6 million were generated between the years ended December 31, 2018 and 2021 and have an indefinite life. At December 31, 2022, the Company has federal tax credits of approximately $1.6 million. These federal tax credits are available to reduce future taxable income and expire at various dates commencing 2026 through 2039. Utilization of the NOLs and tax credit carryforwards may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986 due to ownership change limitations that have occurred previously or that could occur in the future. These ownership changes may limit the amount of net operating loss and tax credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. The Company has not determined whether an ownership change under section 382 has occurred or whether such limitation exists.

The Company files income tax returns in the U.S. federal jurisdiction, and various states. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2017. The Company follows a comprehensive model for the recognition, measurement, presentation and disclosure in consolidated financial statements of uncertain tax positions that have been taken or expected to be taken on a tax return. No liability related to uncertain tax positions is recorded in the Consolidated Financial Statements as of December 31, 2022 and 2021.