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Income Tax
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Tax Income Tax
For financial reporting purposes, loss before provision for income taxes includes the following (in thousands):

Year Ended December 31,
202120202019
Domestic$(109,393)$(16,934)$(71,644)
Foreign(1,402)(1,053)(330)
Loss before provision for income taxes$(110,795)$(17,987)$(71,974)

The (benefit) provision for income tax expense consisted of the following (in thousands):
Year Ended December 31,
202120202019
Current:
Federal$— $— $— 
State252 127 90 
Foreign— — — 
Total current provision252 127 90 
Deferred:
Federal(2,280)— — 
State(966)— — 
Foreign(142)— — 
Total deferred benefit(3,388)— — 
Total (benefit) provision for income taxes$(3,136)$127 $90 

The (benefit) provision for income taxes differs from the amounts computed by applying the statutory federal income tax rate of 21% to pretax loss as follows (in thousands):

Year Ended December 31,
202120202019
Tax benefit at federal statutory rate$(23,267)$(3,777)$(15,115)
State taxes, net of federal benefits(3,498)(364)(2,690)
Stock-based compensation2,018 698 1,471 
Warrants(1,710)(403)— 
Non-deductible officers' compensation8,352 — — 
Change in valuation allowance15,971 3,948 16,560 
Other, net(1,002)25 (136)
Total$(3,136)$127 $90 

The components of deferred tax assets and liabilities are as follows (in thousands):
Year Ended December 31,
20212020
Deferred tax assets:
Net operating loss carryforwards$61,640 $44,342 
Accrued expenses and reserves1,245 68 
Stock-based compensation4,130 732 
Inventory2,214 211 
Other intangibles49 52 
Deferred revenue— 33 
Operating lease liabilities1,441 — 
Other deferred tax assets456 378 
Total gross deferred tax assets71,175 45,816 
Less valuation allowance(61,328)(44,576)
Total deferred tax assets9,847 1,240 
Deferred tax liabilities:
Other intangibles(6,933)— 
Fixed assets(2,088)(1,206)
Operating lease right-of-use assets(1,343)— 
Other deferred tax liabilities(112)(34)
Total deferred tax liabilities(10,476)(1,240)
Net deferred tax liabilities$(629)$— 

The Company determines its valuation allowance on deferred tax assets by considering both positive and negative evidence to ascertain whether it is more likely than not that deferred tax assets will be realized. Realization of deferred tax assets is dependent upon the generation of future taxable income, if any, the timing and amount of which are uncertain. Due to the Company's history of losses, the Company believes that it is not more likely than not that all of the deferred tax assets can be realized as of December 31, 2021 and 2020. Accordingly, the Company has recorded a valuation allowance against its deferred tax assets. The net deferred tax liability is primarily the result of acquired intangibles for which there is no tax basis. The valuation allowance increased by $16.8 million and $4.1 million during the years ended December 31, 2021 and 2020, respectively. During 2021, the Company recorded a one-time benefit of approximately $3.1 million due to the release of the valuation allowance as a result of the Apostrophe acquisition.

As of December 31, 2021, the Company has $225.5 million, $180.3 million, and $3.7 million in federal, state, and foreign loss carryforwards (not tax effected), of which $144.7 million, $41.9 million, and $3.7 million in federal, state, and foreign loss carryforwards do not expire. The remaining federal and state loss carryforwards begin to expire in 2036 and 2023, respectively.

Internal Revenue Code Sections 382 and 383 place a limitation on the amount of taxable income that can be offset by carryforward tax attributes, such as net operating losses or tax credits, after a change in control. Generally, after a change in control, a loss corporation cannot deduct carryforward tax attributes in excess of the limitation prescribed by Sections 382 and 383. Therefore, certain of the Company’s carryforward tax attributes may be subject to an annual limitation regarding their utilization against taxable income in future periods. As a result of issuances of different classes of preferred stock to investors in 2017, 2018, and 2019, the Company triggered “ownership change(s)” as defined in Section 382 and related provisions. The Company believes that some of its net operating losses may be limited by these ownership changes but that any limitation would not have a significant impact to the financial statements since there is no utilization of the net operating losses and a valuation allowance exists against the net operating losses. Subsequent ownership changes may subject the Company to annual limitations of its net operating losses. Such annual limitation could result in the expiration of the net operating loss and credit carryforwards before utilization.

The Company has incurred net operating losses since inception, and it does not have any significant unrecognized tax benefits. Any adjustments to the Company’s uncertain tax positions would result in an adjustment of its net operating loss and valuation allowance rather than resulting in an impact to the effective tax rate. It is not expected that there will be any material change in the unrecognized tax benefits within the next 12 months.
The Company files income tax returns in the U.S., U.K., and various state and local jurisdictions. Due to the net operating loss carryforward, the statute of limitations is open for 2017 and forward for all jurisdictions, none of which are currently under examination by any tax authorities.