Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 18—Income Taxes

The Inflation Reduction Act (“IRA”) and CHIPS and Science Act (“CHIPS Act”) were both enacted in August 2022. The IRA introduced new provisions including a 15% corporate alternative minimum tax for certain large corporations that have at least an average of $1 billion adjusted financial statement income over a consecutive three-tax-year period and a 1% excise tax surcharge on stock repurchases. The CHIPS Act provides a variety of incentives associated with investments in domestic semiconductor manufacturing and related activities. Both Acts are applicable for tax years beginning after December 31, 2022 and did not have any impact on the Company’s consolidated financial statements for the year ended December 31, 2022.

The components of loss before the (benefit) / provision for income taxes is as follows;

	Year ended December 31,
	2022			2021			2020
Domestic operations	$	(281,895	)	$	(253,462	)	$	(54,885	)
Foreign operations		1,165			3,301			2,579
Loss before income taxes	$	(280,730	)	$	(250,161	)	$	(52,306	)

Current and deferred income taxes / (benefits) on loss from continuing operations are as follows;

	Year ended December 31,
	2022			2021
Current
Federal	$	(17	)	$	—
State and local		69			97
Foreign		1,170			1,790
Total current income taxes	$	1,222		$	1,887
Deferred:
Federal	$	(2,114	)	$	(1,422	)
State and local		(736	)		(460	)
Foreign		137			(603	)
Total deferred income benefits		(2,713	)		(2,485	)
Income tax (benefit) / provision	$	(1,491	)	$	(598	)

Significant components of the Company’s net deferred tax assets/(liabilities) are as follows:

	Year ended December 31,
	2022			2021
Deferred tax assets:
Accounts receivable reserve	$	403		$	273
Accrued payroll		6,802			4,990
Net operating loss carry forward		32,171			44,675
Stock-based compensation		48,010			24,586
Interest limitation carry forward		3,154			6,012
Fixed assets		—			1,158
Intangible assets		11,329			7,891
Capital losses		1,187			1,170
Research and Development Costs		19,951			—
Accrued expenses and other		3,575			1,220
		126,582			91,975
Less: Valuation allowance		(112,330	)		(86,210	)
Deferred tax assets	$	14,252		$	5,765
Deferred tax liabilities:
Fixed assets		(7,135	)		(14	)
Deferred state income tax and other		(6,372	)		(4,795	)
Deferred tax liabilities:		(13,507	)		(4,809	)
Net deferred tax assets	$	745		$	956

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as operating loss and tax credit carry forwards. The recognition of a valuation allowance for deferred taxes requires management to make estimates and judgments about the Company’s future profitability which is inherently uncertain. The Company assesses all available positive and negative evidence to determine if its existing deferred tax assets are realizable on a more-likely-than-not basis. In making such an assessment, the Company considered the reversal of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operating results. The ultimate realization of a deferred tax asset is dependent on the Company’s generation of sufficient taxable income within the available net operating loss carryback and/or carryforward periods to utilize the deductible temporary differences. Based on the weight of available evidence including three-year cumulative pre-tax losses, the Company continued to conclude that its U.S. deferred tax assets are not realizable on a more-likely-than-not basis and that a full valuation allowance is required. During the year ended December 31, 2022, the Company’s valuation allowance increased by $26,120.

The following table reconciles the changes in the valuation allowance for the years ended December 31, 2022 and 2021:

Balance as of January 1, 2021	$	(52,089	)
Increase due to current year pre-tax loss		(34,127	)
Others		6
Balance as of December 31, 2021		(86,210	)
Increase due to current year pre-tax loss		(26,111	)
Others		(9	)
Balance as of December 31, 2022	$	(112,330	)

The difference between the federal statutory rate of 21% and the Company’s effective tax rate is summarized as follows:

	December 31, 2022			December 31, 2021
U.S. federal statutory rate		21.0	%		21.0	%
State income taxes		4.4	%		4.6	%
Other permanent differences		(0.5	)%		0.7	%
Global intangible low-taxed income (GILTI)		(1.2	)%		(0.7	)%
Non-deductible stock-based compensation		(2.0	)%		(3.2	)%
Non-deductible officer’s compensation		(11.9	)%		(8.1	)%
Change in fair value of warrant and derivative liability		—			(0.4	)%
Change in valuation allowance		(9.3	)%		(13.7	)%
State change in tax rate		0.2	%		—
Other		(0.2	)%		—
Effective tax rate		0.5	%		0.2	%

For the year ended December 31, 2022 and 2021, the income tax benefit of $1,491 and $598, respectively, relates primarily to (i) the partial release of the Company’s U.S. valuation allowance as certain business combinations consummated during 2022 and 2021 created a source of future taxable income, offset by (ii) an income tax provision for foreign taxes.

As of December 31, 2022, the Company had U.S. federal net operating loss carryforwards of approximately $110,918 of which $21,400 are subject to an annual limitation pursuant to IRC Section 382. Approximately, $66,805 of U.S. federal net operating loss carryforwards expire in varying amounts during 2036 to 2037, if not utilized. These net operating losses are available to offset 100% of future taxable income. The remaining $44,113 of U.S. federal net operating loss may be carried forward indefinitely but are only available to offset 80% of future taxable income.

In addition, the Company had state net operating losses of $105,696 which will expire in varying amounts during 2026 through 2042, if not utilized. The Company also had federal capital loss carryforwards of $4,179 as of December 31, 2022. Capital loss carryforwards are only available to offset capital gain income and will expire in 2023 if not utilized.

As of December 31, 2022, the Company had federal deferred interest carryforwards under IRC Section 163(j) of $9,659. This deferred interest may be carried forward indefinitely but is limited to 30% tax adjusted EBIT.

The Company plans to continue to reinvest foreign earnings indefinitely outside the United States. If these future earnings are repatriated to the United States, or if the Company determines that such earnings will be remitted in the foreseeable future, the Company may be required to accrue applicable withholding taxes. However, it does not expect to incur any significant additional taxes related to such amounts.

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows:

Balance as of January 1, 2021	$	241
Increase in tax positions for current / prior periods		(18	)
Balance as of December 31, 2021		223
Increase in tax positions for current / prior periods		(223	)
Balance as of December 31, 2022	$	—

As of December 31, 2022 and 2021, there were no amounts accrued for interest and penalties. The Company records both accrued interest and penalties related to income tax matters in the income tax provision in the accompanying consolidated

statements of operations and comprehensive loss. The Company does not expect its unrecognized benefits to materially change over the next 12 months.

The Company, or one of its subsidiaries, files its tax returns in the U.S. and certain state and foreign income tax jurisdictions with varying statutes of limitations. The earliest years’ tax returns filed by the Company that are still subject to examination by the tax authorities in the major jurisdictions are as follows.

Jurisdiction	Tax Year
U.S	2019
Czech Republic	2019
India	2020