INCOME TAXES

12 Months Ended

Dec. 31, 2023

INCOME TAXES

INCOME TAXES

NOTE 19. – INCOME TAXES

The following is a summary of the components giving rise to the (benefit) provision for income taxes from continuing operations for the years ended December 31, 2023 and 2022:

	2023		2022
Current:
Federal	$	—	$	—
State		40		14
Foreign		—		—
Total current provision	$	40	$	14
Deferred:
Federal		(11,351)		(6,610)
State		(736)		(4,404)
Foreign		—		—
Total deferred benefit		(12,087)		(11,014)
Change in valuation allowance		12,094		11,021
Total income tax provision	$	47	$	21

The (benefit) provision for income tax from continuing operations varies from that which would be expected based on applying the statutory federal rate to pre-tax book loss, including the effect of the change in the U.S. corporate income tax rates, as follows:

	2023		2022
Statutory federal rate	21.0	%	21.0	%
Other items	0.2		(0.8)
Stock based compensation	(0.8)		(1.3)
Research and development credit carryforward	0.4		—
State tax, net of federal benefit	1.3		12.0
162(m) limitation	(0.2)		(0.9)
Valuation allowance	(22.0)		(30.1)
Effective tax rate	(0.1)	%	(0.1)	%

Individual components of deferred taxes consist of the following as of December 31:

	2023		2022
Deferred tax assets:
Net operating loss carry-forward	$	54,453	$	34,029
Inventory		2,020		220
Stock-based compensation		862		1,144
Start-up expenditures		155		175
Research and development credit carryforward		1,424		1,205
Accrued bonus		133		458
Severance liability		95		151
Credit loss reserves		2		—
Research and development costs		1,617		813
Operating lease obligations		476		229
Capital loss on investment		2,449		2,209
Note payable and warrant liability		581		—
Other		1,758		50
	$	66,025	$	40,683
Deferred tax liabilities:
Machinery and equipment		(283)		(221)
Patents and trademarks		(193)		(203)
Operating lease right-of-use assets		(467)		(225)
Other intangible assets		(385)		(334)
		(1,328)		(983)
Valuation allowance		(64,763)		(39,759)
Net deferred taxes	$	(66)	$	(59)

The Company has net operating loss (“NOL”) carryforwards of approximately $193,322 as of December 31, 2023 that do not expire. The Company had accumulated an NOL carryforward of approximately $46,920 through December 31, 2017 and this NOL carryforward begins to expire in 2030. As of December 31, 2023, the Company has a research and development credit carryforward of approximately $1,424 that begins to expire in 2030. The Company generated a capital loss carryover of approximately $9,932 as of December 31, 2023, that begins to expire in 2026. Utilization of these NOL carryforwards may be subject to an annual limitation in the case of equity ownership changes, as defined by law. Due to the uncertainty of the Company’s ability to generate sufficient taxable income in the future, the Company has recorded a valuation allowance to reduce the net deferred tax asset to zero. These carryforwards are included in the net deferred tax asset that has been fully offset by the valuation allowance. The valuation allowance increased for continuing operations by $12,094 and $11,021 for the years ended December 31, 2023, and 2022, respectively, and increased an additional $12,910 due to tax attributes that were generated as a part of discontinued

operations but remain on a prospective basis with continuing operations due to the Company filing a consolidated US Federal return for the year ended December 31, 2023.

ASC 740 provides guidance on the financial statement recognition and measurement for uncertain income tax positions that are taken or expected to be taken in a company’s income tax return. The Company has evaluated its tax positions and believes there are no uncertain tax positions as of December 31, 2023.