Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 18—Income Taxes

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

	Year ended December 31,
	2023			2022			2021
Domestic operations	$	(187,763	)	$	(281,895	)	$	(253,462	)
Foreign operations		1,319			1,165			3,301
Loss before income taxes	$	(186,444	)	$	(280,730	)	$	(250,161	)

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

	Year ended December 31,
	2023			2022
Current
Federal	$	(74	)	$	(17	)
State and local		95			69
Foreign		994			1,170
Total current income taxes	$	1,015		$	1,222
Deferred:
Federal	$	—		$	(2,114	)
State and local		—			(736	)
Foreign		22			137
Total deferred income benefits		22			(2,713	)
Income tax provision/(benefit)	$	1,037		$	(1,491	)

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

	Year ended December 31,
	2023			2022
Deferred tax assets:
Accounts receivable reserve	$	832		$	403
Accrued payroll		6,088			6,802
Net operating loss carry forward		33,931			32,171
Stock-based compensation		45,696			48,010
Interest limitation carry forward		6,148			3,154
Tax credit		5,236			—
Intangible assets		15,391			11,329
Capital losses		—			1,187
Research and development costs		28,350			19,951
Accrued expenses and other		2,788			3,575
		144,460			126,582
Less: Valuation allowance		(129,661	)		(112,330	)
Deferred tax assets	$	14,799		$	14,252
Deferred tax liabilities:
Fixed assets		(4,921	)		(7,135	)
Right-to-use asset		(1,838	)		—
Deferred state income tax and other		(7,312	)		(6,372	)
Deferred tax liabilities:		(14,071	)		(13,507	)
Net deferred tax assets	$	728		$	745

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.

A significant piece of objective negative evidence was the cumulative loss incurred in the U.S and certain foreign jurisdictions including Belgium and France over three-year period ended December 31, 2023. Such objective evidence limits the Company's ability to consider other subject evidence, such as the Company projections for future growth. On the basis of this evaluation, the Company continued to conclude that its U.S., Belgium and France deferred tax assets are not realizable on a more-likely-than-not basis and that a full valuation allowance is required. The amount of deferred tax asset considered realizable, however, could be adjusted if estimates of future income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for future growth. During 2023, the Company’s valuation allowance increased by $17,331.

The following table reconciles the changes in the valuation allowance for the years ended December 31, 2023 and 2022:

Balance as of January 1, 2022	$	(86,210	)
Increase due to current year pre-tax loss		(26,111	)
Others		(9	)
Balance as of December 31, 2022		(112,330	)
Increase due to current year pre-tax loss		(17,274	)
Others		(57	)
Balance as of December 31, 2023	$	(129,661	)

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

	December 31, 2023			December 31, 2022
U.S. federal statutory rate		21.0	%		21.0	%
State income taxes		2.8	%		4.4	%
Other permanent differences		(0.4	)%		(0.5	)%
Global intangible low-taxed income (GILTI)		—	%		(1.2	)%
Non-deductible stock-based compensation		(2.6	)%		(2.0	)%
Non-deductible officer’s compensation		(12.8	)%		(11.9	)%
Research and development credit		2.0	%		—	%
Change in valuation allowance		(9.3	)%		(9.3	)%
State change in tax rate		(0.6	)%		0.2	%
Other		(0.6	)%		(0.2	)%
Effective tax rate		(0.5	)%		0.5	%

For the year ended December 31, 2023, the income tax provision of $1,037 relates primarily to an income tax provision for foreign taxes. For the year ended December 31, 2022, the income tax benefit of $1,491 relates primarily to (i) the partial release of the Company’s U.S. valuation allowance as certain business combinations consummated during 2022 created a source of future taxable income, offset by (ii) an income tax provision for foreign taxes.

As of December 31, 2023, the Company had U.S. federal net operating loss carryforwards of approximately $113,428 of which $7,211 are subject to an annual limitation pursuant to IRC Section 382. Approximately, $69,314 of U.S. federal net operating loss carryforwards expire in varying amounts during 2035 to 2037, if not utilized. These net operating losses are available to offset 100% of future taxable income. The remaining $44,114 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 $119,896 which will expire in varying amounts during 2026 through 2043, if not utilized. The Company also had federal research tax credit carryforwards of $3,640 as of December 31, 2023, which expire in varying amounts during 2042 to 2043, if not utilized. The Company also had state research tax credit carryforwards of $1,595 as of December 31, 2023, of which $1,410 may be carried forward indefinitely. The remaining $185 will expire in varying amounts from 2029 to 2043 if not utilized.

As of December 31, 2023, the Company had federal deferred interest carryforwards under IRC Section 163(j) of $18,107. This deferred interest may be carried forward indefinitely but is limited to 30% of future 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, 2022	$	223
Increase in tax positions for current / prior periods		(223	)
Balance as of December 31, 2022		—
Increase in tax positions for current / prior periods		—
Balance as of December 31, 2023	$	—

As of December 31, 2023 and 2022, there were no amounts accrued for interest and penalties. The Company’s accounting policy is to record 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	2020
Czech Republic	2020
India	2021