INCOME TAXES

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The Company recorded a federal income tax loss fully related to its U.S.-based jurisdictions for the years ended December 31, 2024 and 2023, respectively. As a full valuation allowance is recorded against all of the deferred tax assets, the Company did not record a federal provision for income tax or benefits during the years ended December 31, 2024 and 2023, respectively. The provision for income taxes for the year ended December 31, 2024 relates primarily to state income taxes.

A reconciliation of the Company's statutory income tax rate to the Company's effective income tax rate is as follows:

	Years Ended December 31,
	2024		2023
Federal statutory rate	21.0	%	21.0	%
Effect of:
State taxes, net of federal tax benefit	(4.0	%)	6.3	%
Change in valuation allowance	(17.6	%)	(24.4	%)
Warrant remeasurement	—	%	0.5	%
Stock compensation	(1.7	%)	(3.6	%)
Permanent differences	(0.8	%)	(0.2	%)
Other, net	2.5	%	—	%
Effective tax rate	(0.6	%)	(0.4	%)

The components of deferred tax assets and liabilities are as follows:

	December 31,
	2024		2023
Deferred tax assets:
Accruals and reserves	$	1,811	$	3,309
Federal, state and local net operating loss carryforwards	30,814		32,441
Stock compensation	1,183		914
Section 163(j) interest carryforward	11,281		8,747
Lease liabilities	158		231
Total deferred tax asset before valuation allowance	45,247		45,642
Valuation allowance	(44,495)		(39,968)
Deferred tax asset - net of valuation allowance	752		5,674
Deferred tax liabilities:
Right-of-use assets	(144)		(224)
Depreciation & amortization	(608)		(5,450)
Total deferred tax liabilities	(752)		(5,674)
Net deferred tax asset (liability)	$	—	$	—

As of December 31, 2024 and 2023, the Company had a U.S. federal net operating loss carryforward of $124.8 million and $134.1 million, respectively. As of December 31, 2024 and 2023, the Company has state net operating loss (“NOL”) carryforwards of $91.0 million and $94.1 million, respectively. Of the $124.8 million of Federal NOL carryforwards, $22.6 million begins to expire in 2033 and $102.2 million may be carried forward indefinitely. The state net operating loss carryforwards begin to expire in 2025.

Future realization of the tax benefits of existing temporary differences and net operating loss carryforwards ultimately depends on the existence of sufficient taxable income within the carryforward period. As of December 31, 2024 and 2023, the Company performed an evaluation to determine whether a valuation allowance was needed. The Company considered all available evidence, both positive and negative, which included the results of operations for the current and preceding years. The Company determined that it was not possible to reasonably quantify future taxable income and determined that it is more likely than not that all of the deferred tax assets will not be realized. Accordingly, the Company maintained a full valuation allowance as of December 31, 2024 and 2023.

Under Internal Revenue Code Section 382, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. The Company conducted a high level ownership analysis under IRC Section 382 based upon publicly available information as of December 31, 2024 and determined that there was an ownership change in relation to the De-SPAC transaction on June 6, 2021. This ownership change generates a limit on the pre-change tax attributes, though this limit has not resulted in any NOL or other tax attributes being written off, as the limit far exceeds the Company's projected near term utilization. There has likely been no additional ownership change since the De-SPAC transaction, but the Company will continue to monitor moving forward as any additional change could result in a further limitation on the utilization of the Company's tax attributes..

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations for both federal taxes and the many states in which we operate or do business in. ASC 740 states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits.

We record uncertain tax positions as liabilities in accordance with ASC 740 and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. As of December 31, 2024 and 2023, we have not recorded any uncertain tax positions in our financial statements.

We recognize interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations. As of December 31, 2024 and 2023, no accrued interest or penalties are included on the related tax liability line in the consolidated balance sheet.

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending tax examinations. The Company's tax years are still open under statute from December 31, 2021, to the present.