| Schedule of Components of Company's Profit (Loss) Before Income Taxes and Tax Provisions |
The components of the Company’s profit (loss) before income taxes are as follows:
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
|
December 31, |
|
(in thousands) |
|
2023 |
|
|
2022 |
|
Profit (loss) before income taxes: |
|
|
|
|
|
|
Domestic |
|
|
(75,028 |
) |
|
$ |
(24,673 |
) |
Foreign |
|
|
(29,125 |
) |
|
|
(1,133 |
) |
Total |
|
$ |
(104,153 |
) |
|
$ |
(25,806 |
) |
The components of the income tax expense (benefit) are as follows:
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(in thousands) |
|
2023 |
|
|
2022 |
|
Current Provision |
|
|
|
|
|
|
Federal |
|
$ |
— |
|
|
$ |
— |
|
State |
|
|
— |
|
|
|
3 |
|
Foreign |
|
83 |
|
|
|
69 |
|
Total current expense (benefit) |
|
$ |
83 |
|
|
|
72 |
|
Deferred Provision |
|
|
|
|
|
|
Federal |
|
|
— |
|
|
|
(136 |
) |
State |
|
|
— |
|
|
|
(52 |
) |
Foreign |
|
|
(669 |
) |
|
|
(302 |
) |
Total deferred expense (benefit) |
|
|
(669 |
) |
|
|
(490 |
) |
Total income tax expense (benefit) |
|
$ |
(586 |
) |
|
$ |
(418 |
) |
The income tax expense (benefit) primarily relates to acquired deferred tax liabilities serving as a source of income to support recognition of certain existing deferred tax assets as well as the benefit related to certain foreign losses.
|
| Schedule of Overall Effective Income Tax Rate |
The overall effective tax rate differs from the statutory US federal tax rate as follows:
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
% of Pretax Profit (Loss) |
|
|
|
2023 |
|
|
2022 |
|
Statutory US federal tax rate |
|
|
21.00 |
% |
|
|
21.00 |
% |
State income taxes, net of federal benefit |
|
|
4.04 |
|
|
|
5.88 |
|
Stock-based compensation |
|
|
(2.19 |
) |
|
|
(8.24 |
) |
Nondeductible expenses |
|
|
(0.15 |
) |
|
|
— |
|
Goodwill impairment |
|
|
(6.06 |
) |
|
|
— |
|
Fair market value change in warrants and earn out liabilities |
|
|
— |
|
|
|
47.85 |
|
Transaction costs |
|
|
— |
|
|
|
(1.26 |
) |
Officer's compensation |
|
|
(0.13 |
) |
|
|
(0.69 |
) |
Research and development credits |
|
|
2.56 |
|
|
|
32.93 |
|
Valuation allowance |
|
|
(18.11 |
) |
|
|
(91.07 |
) |
Change in statutory tax rate |
|
|
(0.04 |
) |
|
|
(1.05 |
) |
Other |
|
|
(0.36 |
) |
|
|
(3.80 |
) |
Effective tax rate |
|
|
0.56 |
% |
|
|
1.55 |
% |
|
| Schedule of Components of the Company's Net Deferred Tax Assets |
Significant components of the Company’s net deferred tax assets are as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
(in thousands) |
|
2023 |
|
|
2022 |
|
Deferred tax assets |
|
|
|
|
|
|
Lease liability |
|
$ |
10,493 |
|
|
$ |
11,220 |
|
Capitalized research and development costs |
|
|
14,596 |
|
|
|
9,453 |
|
Stock compensation |
|
|
2,175 |
|
|
|
2,296 |
|
Reserves |
|
|
689 |
|
|
|
824 |
|
Deferred revenue |
|
|
1,298 |
|
|
|
778 |
|
Accrued expenses |
|
|
564 |
|
|
|
509 |
|
Amortization |
|
|
— |
|
|
|
200 |
|
Inventory reserves |
|
|
670 |
|
|
|
— |
|
Net operating losses |
|
|
42,646 |
|
|
|
33,690 |
|
Research and development credits |
|
|
15,465 |
|
|
|
12,260 |
|
Other credits |
|
|
407 |
|
|
|
254 |
|
Gross deferred tax assets |
|
$ |
89,003 |
|
|
$ |
71,484 |
|
Less: Valuation allowance |
|
|
(78,576 |
) |
|
|
(59,514 |
) |
Deferred tax liabilities |
|
|
|
|
|
|
Right-of-use assets |
|
|
(8,966 |
) |
|
|
(10,599 |
) |
Deferred expenses |
|
|
(125 |
) |
|
|
— |
|
Acquired intangible assets |
|
|
(3,218 |
) |
|
|
(3,690 |
) |
Depreciation |
|
|
(203 |
) |
|
|
(464 |
) |
Loss on sale of assets |
|
|
(20 |
) |
|
|
— |
|
Net deferred tax assets |
|
$ |
(2,105 |
) |
|
$ |
(2,783 |
) |
As of December 31, 2023, the Company had federal net operating loss carryforwards of $15.0 million that are subject to expire at various dates between 2033 and 2037, and net operating losses of $156.6 million, that have no expiration date and can be carried forward indefinitely but are limited in their usage to 80% of annual taxable income. As of December 31, 2023, the Company had state tax net operating loss carryforwards of $89.9 million, that are subject to expire at various dates between 2026 and 2042. At December 31, 2023, the Company had federal and state research and development tax credit carryforwards of $11.0 million and $5.6 million, which begin to expire in 2033 and 2038, respectively.
|
| Schedule of Deferred Income Tax Asset Valuation Allowance |
The following table presents the changes in the balance of the Company’s deferred income tax asset valuation allowance:
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
(in thousands) |
|
2023 |
|
|
2022 |
|
Balance at beginning of year |
|
$ |
59,514 |
|
|
$ |
36,009 |
|
Additions charged to expense |
|
|
19,062 |
|
|
|
23,505 |
|
Balance at end of year |
|
$ |
78,576 |
|
|
$ |
59,514 |
|
|