Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Note 11—Income Taxes

Provision (benefit) for income taxes consisted of the following:

	Year Ended December 31,
$ in thousands	2022		2021
Current:
State	$	4	$	2
Deferred:
Foreign	(1,020)		—
Provision (benefit) for income taxes	$	(1,016)	$	2

The domestic and foreign components of pre-tax income were as follows:

	Year Ended December 31,
$ in thousands	2022		2021
Domestic	$	(136,881)	$	(136,753)
Foreign	(6,135)		(653)
Net loss before taxes	$	(143,016)	$	(137,406)

The effective tax rate of the Company differed from the federal statutory rate as follows:

	Year Ended December 31,
$ in thousands	2022				2021
U.S. federal statutory income tax rate	$	(30,033)	21.0	%	$	(28,855)	21.0	%
State taxes, net of federal benefit	(9,125)		6.4	%	(3,590)		2.6	%
SAFE instruments remeasurement	—		—	%	18,250		(13.3)	%
Warrant liabilities remeasurement	(2,923)		2.0	%	1,397		(1.0)	%
Share-based compensation	4,401		(3.1)	%	—		—	%
Transaction costs	—		—	%	(1,531)		1.1	%
Valuation allowance	37,355		(26.1)	%	14,531		(10.6)	%
Other	(691)		0.5	%	(200)		0.2	%
Provision (benefit) for income taxes	$	(1,016)	0.7	%	$	2	—	%

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. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts more likely than not to be realized. The increase in the valuation allowance during the year ended December 31, 2022 was due to net increases in our net deferred tax assets. No portion of our valuation allowance was released into our income tax benefit during the year ended December 31, 2022.

The components of the deferred tax assets and liabilities were as follows:

	December 31,
$ in thousands	2022		2021
Deferred tax assets:
Net operating loss carryforwards	$	44,221	$	19,816
Share-based compensation	3,779		1,705
Operating lease liabilities	4,628		4,896
Capitalized research and development costs	5,716		—
Provision for contract losses	8,221		—
Other	1,468		1,619
Gross deferred tax assets	68,033		28,036
Less: Valuation allowance	(58,595)		(21,238)
Net deferred tax assets	9,438		6,798
Deferred tax liabilities:
Depreciation and amortization	(1,537)		(887)
Operating lease right-of-use assets	(4,419)		(4,824)
Other	(3,482)		(1,087)
Total deferred tax liabilities	(9,438)		(6,798)
Net deferred income taxes	$	—	$	—

In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based upon the analysis of federal and state deferred tax balances, future tax projections and availability of taxable income in the carryback period, the Company recorded a valuation allowance against the federal and state deferred tax assets of $58.6 million and $21.2 million as of December 31, 2022 and 2021, respectively.

As of December 31, 2022, the Company has federal net operating loss carryforwards of $146.8 million and state net operating loss carryforwards of $143.8 million. The federal and state net operating losses will expire starting with 2033 and a portion of the federal net operating losses may be carried forward indefinitely. As of December 31, 2022, the Company has foreign net operating losses carryforwards of $2.7 million, which may be carried forward indefinitely.

The 2019 through 2022 tax years remain open to examination by the Internal Revenue Service and the 2018 through 2022 tax years remain open to examination by the state tax authorities. In addition, the utilization of net loss carryforwards is subject to federal and state review for the periods in which those net losses were incurred. The Company is not under audit by any taxing jurisdictions at this time.

Utilization of the net operating loss and research tax credit carryforwards are subject to an annual limitation based on changes in ownership, as defined by Sections 382 and 383 of the Internal Revenue Code of 1986, as amended.