INCOME AND OTHER TAXES

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

INCOME AND OTHER TAXES

INCOME AND OTHER TAXES

Income Taxes

Loss before provision for income taxes for the years ended December 31, 2022 and December 31, 2021 consists of the following:

	Year Ended December 31,
	2022		2021
U.S. loss	$	(59,153)	$	(137,589)
Foreign income (loss)	(69)		10
Total current	$	(59,222)	$	(137,579)

The major components of income tax (expense) benefit attributable to loss from operations consists of:

	Year Ended December 31,
	2022		2021
Current:
Federal	$	—	$	50
State	(87)		(33)
Foreign	(4)		(160)
Total current	$	(91)	$	(143)
Deferred:
Federal	—		—
State	—		—
Foreign	—		—
Total deferred	—		—
Total income tax expense	$	(91)	$	(143)

Income tax (expense) benefit attributable to loss from continuing operations for the years ended December 31, 2022 and 2021 differed from the amounts computed by applying the U.S. federal income tax rates of 21.0%, as a result of the following:

	Year Ended December 31,
	2022	2021
U.S. federal statutory tax rate	21.0%	21.0%
State taxes, net of federal benefit	3.3%	1.8%
Share based compensation	(2.0)%	(0.3)%
Change in fair value of financial instruments and other	(2.7)%	1.4%
Goodwill impairment(1)	—%	(11.4)%
Change in valuation allowance(2)	(24.8)%	(12.5)%
R&D credit	0.7%	0.4%
Prior year true up	5.2%	—%
Other, net	(0.8)%	(0.5)%
Effective tax rate	(0.1)%	(0.1)%

(1)During the year ended December 31, 2021, the Company impaired its goodwill associated with the acquisition of Abacus. A portion of this impairment charge is permanently disallowed for tax purposes.

(2)During the year ended December 31, 2022 and 2021, the Company maintained a full valuation allowance on its deferred tax assets.

The Coronavirus Aid, Relief and Economic Security ("CARES") Act and miscellaneous other income taxes receivable result in total income taxes receivable as of December 31, 2021 of $10,764. During the year ended December 31, 2022, the Company received $10,841 from the Internal Revenue Service ("IRS") which was the remaining amount of the income taxes receivable and interest.

The components of deferred tax assets and liabilities are as follows:

	December 31,
	2022		2021
Deferred tax assets:
Net operating loss and other carryforwards	$	53,997	$	45,557
Inventory provision and UNICAP 263A	8,079		4,191
Lease liability	4,972		5,586
Section 174 capitalized costs	1,733		—
Share-based compensation	976		1,853
Other	2,061		1,020
Total deferred tax assets	$	71,818	$	58,207
Valuation allowance	(67,582)		(52,888)
Total deferred tax assets, net	$	4,236	$	5,319
Deferred tax liabilities:
Right of use assets	(4,063)		(5,110)
Warrants	(173)		(209)
Total deferred tax liabilities	$	(4,236)	$	(5,319)
Net deferred taxes	$	—	$	—

The realization of deferred income tax assets may be dependent on the Company’s ability to generate sufficient income in future years in the associated jurisdiction to which the deferred tax assets relate. The Company considers all available positive and negative evidence, including scheduled reversals of deferred income tax liabilities, projected future taxable income, tax planning strategies, and recent financial performance. Based on the review of all positive and negative evidence, including a three-year cumulative pre-tax loss, the Company continues to believe its deferred tax assets are not more-likely-than-not to be realized and, as such, a full valuation allowance is recorded against net deferred taxes. For the years ended December 31, 2022 and 2021, the Company’s valuation allowance increased by $14,694 and $17,203, respectively, primarily related to the incremental net operating losses and an increase to the inventory provision.

As of December 31, 2022, the Company has US federal, US state, and Canadian net operating losses of approximately $195,381, $159,964, and $8,654 respectively. The entire US federal NOLs are post-2017 NOL and therefore can be carried forward indefinitely and the US state NOLs will begin to expire in, 2029. The Canada NOLs will begin to expire in 2038. For the year ended December 31, 2022 and 2021, the Company also has a research and development credit carryforward of $2,205 and $1,788, respectively, which begin to expire in 2039.

Tax laws impose restrictions on the utilization of net operating loss carryforwards and research and development credit carryforwards in the event of a change in ownership of the Company as defined by Internal Revenue Code Section 382 and 383. The Company may have experienced ownership changes in the past that impact the availability of its net operating losses and tax credits. Should there be additional ownership changes in the future, the Company's ability to utilize existing carryforwards could be substantially restricted.

Uncertain tax position

A reconciliation of the beginning and ending amount of uncertain tax positions as of December 31, 2022 and 2021 is as follows:

Balance at December 31, 2021	$	179
Additions for current year tax positions	40
Additions for prior year tax positions	2
Reductions for prior year tax positions	—
Reductions as a result of settlement with tax authority	—
Balance at December 31, 2022	$	221

Balance at December 31, 2020	$	134
Additions for current year tax positions	52
Additions for prior year tax positions	—
Reductions for prior year tax positions	(7)
Reductions as a result of settlement with tax authority	—
Balance at December 31, 2021	$	179

The Company recognizes the tax benefit from an uncertain tax position only if it is probable that the tax position will be sustained based on its technical merits. The Company measures and records the tax benefits from such a position based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company’s estimated liabilities related to these matters are adjusted in the period in which the uncertain tax position is effectively settled, the statute of limitations for examination expires or when additional information becomes available. The Company’s liability for unrecognized tax benefits requires the use of assumptions and significant judgment to estimate the exposures associated with the Company's various filing positions. Although the Company believes that the judgments and estimates made are reasonable, actual results could differ and resulting adjustments could materially affect the Company's effective income tax rate and income tax provision. The Company’s policy is to recognize interest and penalties on taxes, if any, as income tax expense.

If recognized, none of the uncertain tax positions would affect the effective tax rate. The Company does not anticipate any significant changes to the uncertain tax positions in the next twelve months.

The Company files income tax returns in the U.S. federal, various state jurisdictions, Canada, and Israel. In the normal course of business, it is subject to examination by taxing authorities throughout the world. The Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities in years before 2019.

The Inflation Reduction Act (“IRA”) was enacted on August 16, 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 IRA is applicable for tax years beginning after December 31, 2022 and had no benefit to our consolidated financial statements for any of the periods presented, and we do not expect it to have a direct material impact on our future results of operations, financial condition, or cash flows.

Other Taxes

Employee Retention Credit

The Company qualified for federal government assistance through employee retention credit (“ERC”) provisions of the Consolidated Appropriations Act of 2021. As there is no authoritative guidance under U.S. GAAP on accounting for government assistance to for-profit business entities, we account for grants provided by the government, including accounting for certain refundable tax credits, by analogy to International Accounting Standard (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance. In accordance with IAS 20, management determined it has reasonable assurance for receipt of the ERC and recorded the ERC benefit of $4,106 for the year ended December 31, 2022 as an offset to Selling, general and administrative expenses expense. Due to the expected timing of receipt of the ERC, a corresponding receivable was recognized within other long-term assets as of December 31, 2022.