Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 21 – INCOME TAXES

The components of our loss before income taxes for the years ended December 31, 2024 and 2023, are as follows:

	For the Years Ended December 31,
$s in thousands	2024		2023
Domestic	$	(15,566)	$	(77,659)
Foreign	(763)		(1)
Loss before income taxes	$	(16,329)	$	(77,660)

The components of the current tax provision and deferred tax benefit for the years ended December 31, 2024 and 2023, are as follows:

	For the Years Ended December 31,
$s in thousands	2024		2023
Current tax provision:
U.S. Federal	$	—	$	—
State and local	(47)		40
Foreign	427		—
Total current tax provision	$	380	$	40
Deferred tax benefit:
U.S. Federal	$	(1,269)	$	(273)
State and local	127		(69)
Foreign	—		—
Total deferred tax benefit	$	(1,142)	$	(342)
Income tax benefit	$	(762)	$	(302)

The reconciliation between the statutory federal income tax rate and the effective income tax rate for the years ended December 31, 2024 and 2023, are as follows:

	For the Years Ended December 31,
	2024		2023
Income tax - at U.S. statutory tax rate	21.0	%	21.0	%
Warrant mark-to-market adjustment	5.8	%	—	%
State and local taxes - net of federal	4.9	%	3.3	%
Return to provision	(1.6)	%	—	%
Stock-based compensation	(34.5)	%	(7.5)	%
Valuation allowance	10.9	%	(15.5)	%
Other	(1.8)	%	(0.9)	%
Effective rate of tax	4.7	%	0.4	%

In addition to the US federal statutory income tax rate, significant recurring items that affect the Company’s income tax rate are state and local income taxes, nondeductible officer compensation, and change in valuation allowance recognition.

The components of the total net deferred tax assets and liabilities as of December 31, 2024 and 2023, consisted of the following:

	As of December 31,
$s in thousands	2024		2023
Deferred tax assets:
Net operating losses	$	24,117	$	21,400
Partnership	11,638		17,750
Interest expense limitation - 163(j)	11,568		5,690
Stock-based compensation	3,492		6,282
Other	123		743
Total deferred tax assets	50,938		51,865
Valuation allowance for deferred tax assets	(49,748)		(51,523)
Net deferred tax assets	1,190		342
Deferred tax liabilities:
Intangibles - Ignis	(1,190)		(342)
Total deferred tax liabilities	(1,190)		(342)
Net deferred tax assets (liabilities)	$	—	$	—

The total deferred tax liability presented in the financial statements as of December 31, 2024 is subject to certain significant estimates. The valuation allowance recorded as of December 31, 2024 is reliant on the scheduling of future taxable income. This is highly subjective in nature and may materially change within the next 12 months.

As of December 31, 2024, the Company had $95.6 million of federal net operating loss carryforwards available, and all have an unlimited carryforward period. Future federal NOL utilization is limited to 80% of taxable income on an annual basis. As of December 31, 2024, the Company had $95.6 million of state net operating loss carryforwards available. If not utilized, the state net operating loss carryforwards will expire at various dates beginning in 2033. As of December 31, 2024, the Company had $44.8 million of interest expense limitation available, and all of the limitation has an unlimited carryforward period. Future interest expense utilization is limited to 30% of taxable income on an annual basis.

The Company records interest and penalties through income tax expense relating to uncertain tax positions. As of December 31, 2024 and 2023, the Company has not recognized any liabilities for uncertain tax positions nor has the Company accrued interest and penalties related to uncertain tax positions.

The Company’s federal, state and foreign income tax returns are subject to audit. The Company is not currently under audit by federal or foreign taxing authorities. The years open to examination include years ending 2021 to 2023 for federal income tax purposes, years ending 2020 to 2023 for state income tax purposes, and years ending 2020 to 2023 for foreign income tax purposes.

Due to uncertainty regarding future utilization, a valuation allowance has been recorded in respect of all federal and state deferred tax assets, inclusive of federal and state net operating loss carryforwards and state credit carryforwards. Management’s determined that it is more likely than not that the benefit of such loss and credit carryforwards will not be fully realized. The Company has a valuation allowance of $49.7 million and $51.5 million as of December 31, 2024 and 2023, respectively. The valuation allowance decreased by $1.8 million.