Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax expense for the years ended December 31, 2023 and 2022 was $10 and $29, respectively.

The provision for income taxes differs from the amount computed at federal statutory rates as follows for the year ended December 31:

	2023		2022
Federal income tax at statutory rates	$	(6,907)	$	(16,654)
State income tax at statutory rates	(636)		(2,737)
Change in valuation allowance	4,487		19,994
Warrant (benefit) expense (1)	194		(1,331)
Transaction costs (2)	375		—
Stock-based compensation	2,101		895
Other	396		(138)
Total income tax provision	$	10	$	29

(1) Represents a permanent item attributed to common stock mark-to-market adjustments.

(2) Represents costs associated with the February 2023 preferred stock issuance and the July 2023 reverse stock split

Significant components of the Company’s deferred income tax assets (liabilities) are as follows as of December 31:

	2023		2022
Deferred tax assets
Accrued liabilities	$	2,509	$	2,734
Stock-based compensation	1,719		2,452
163(j) Interest expense limitation	1,823		1,051
Net operating loss carryforwards	43,726		38,042
174 Capitalization	4,195		5,379
Lease Liability	289		800
Other	1,153		802
Total deferred income tax assets	$	55,414	$	51,260
Deferred tax liabilities
ROU Asset	(228)		(554)
Other	(23)		(30)
Total deferred tax liabilities	(251)		(584)
Valuation allowance	$	(55,163)	$	(50,676)
Net deferred tax asset (liability)	$	—	$	—

As of December 31, 2023, the Company had $37,385 of federal and $6,341 of state net operating loss carry-forwards available to offset future taxable income, some of which, if not utilized, will begin to expire in 2034 for federal and 2036 for state purposes.

Accounting standards require that the tax benefit of net operating losses, temporary differences, and credit carryforwards be recorded as an asset to the extent that management assesses the realization is more likely than not. Realization of the future tax benefits from the net operating losses or credit carryforwards, if any, is dependent on the Company’s ability to generate sufficient taxable income within the applicable carryforward period. The Company has established a full valuation allowance due to historical cumulative losses and the uncertainty of its ability to generate sufficient taxable income to realize the deferred tax assets.

As of December 31, 2023, the Company recorded a valuation allowance of $55,163 for the portion of the deferred tax assets that we do not expect to be realized. Due to our history of losses in the U.S., the net cumulative deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by $4,487 in the year ended December 31, 2023.

The utilization of the net operating loss carryforwards could be subject to annual limitations under Section 382 of the Internal Revenue Code. Section 382 imposes limitations on a corporation’s ability to utilize its NOL carryforwards if it experiences an “ownership change.” In general terms, an ownership change results from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50% over a three-year period. Additionally, net operating losses utilized after 2017 would be limited to 80% of taxable income in years in which NOL carryforwards would be utilized.

Uncertain tax positions are recorded when it is more likely than not that a given tax position would not be sustained upon examination by taxing authorities. Based on positions taken in the Company’s tax filings, the Company has concluded that there are no significant uncertain tax positions requiring disclosure, and there are no material amounts of unrecognized tax benefits.