XML 34 R20.htm IDEA: XBRL DOCUMENT v3.22.4
Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of loss before provision for income taxes were as follows:
Years Ended December 31,
(in thousands)202220212020
United States$(116,272)$(46,241)$(35,542)
Foreign3,296 8,528 4,141 
Loss before provision for income taxes$(112,976)$(37,713)$(31,401)
The components of the provision for income taxes were as follows:
Years Ended December 31,
(in thousands)202220212020
Current tax benefit (expense)
Federal$— $— $2 
State(9)(257)(132)
Foreign(2,449)(1,650)(1,019)
Total current tax expense(2,458)(1,907)(1,149)
Deferred tax benefit (expense)
Federal— — — 
State— — — 
Foreign1,415 864 (14)
Total deferred tax benefit (expense)1,415 864 (14)
Provision for income taxes$(1,043)$(1,043)$(1,163)
A reconciliation at the applicable federal statutory rate to the Company’s effective income tax rate were as follows:
Years Ended December 31,
202220212020
Federal income taxes at statutory rate21.00 %21.00 %21.00 %
State income tax, net of federal benefit4.06 11.37 2.93 
Increase in valuation allowance(24.08)(66.51)(26.26)
Stock-based compensation0.92 31.08 — 
U.S. tax on foreign earnings(2.03)— — 
Other(0.79)0.29 (1.37)
Effective income tax rate(0.92) %(2.77) %(3.70) %
As of December 31, 2022, the Company has U.S. net operating loss (“NOL”) carryforwards of $230.3 million and state NOL carryforwards of $128.7 million. Such NOL carryforwards will begin to expire between 2032 and 2042. NOL carryforwards are subject to possible limitation should a change in ownership of the Company occur, as defined by Internal Revenue Code Section 382.
The tax effects of the temporary differences and carryforwards that give rise to deferred tax assets were as follows:
As of December 31,
(in thousands)20222021
Deferred tax assets
Net operating loss carryforwards$58,798 $67,253 
Accrued expenses2,270 2,561 
Stock-based compensation13,508 4,272 
Operating lease liabilities1,156 642 
Capitalized research costs28,605 — 
Other2,442 1,865 
Gross deferred tax assets106,779 76,593 
Deferred tax liabilities
Fixed assets and intangible assets(311)(112)
Operating lease right-of-use assets(1,076)(485)
Other(1,720)(848)
Gross deferred tax liabilities(3,107)(1,445)
Valuation allowance(101,446)(74,244)
Net deferred tax assets$2,226 $904 
The Company maintains a full valuation allowance against the U.S. net deferred tax assets, as it believes that these deferred tax assets do not meet the more likely than not threshold.
The net change in the total valuation allowance was an increase of $27.2 million, $25.1 million, and $8.2 million for the years ended December 31, 2022, 2021, and 2020 respectively. The following represents the changes in the Company’s valuation allowance for the years ended December 31, 2022, 2021, and 2020, respectively:
Years Ended December 31,
(in thousands)202220212020
Balance at the beginning of the period$74,244 $49,159 $40,913 
Charged to net income27,202 25,085 8,246 
Balance at the end of the period$101,446 $74,244 $49,159 
The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and internationally. As of December 31, 2022, tax years 2012 through 2022 remain open for examination by taxing authorities.
The calculation of the Company’s tax obligations involves dealing with uncertainties in the application of complex tax laws and regulations. ASC 740, Income Taxes, provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. The Company has assessed its income tax positions and recorded tax benefits for all years subject to examination, based upon its evaluation of the facts, circumstances and information available at each period end. For those tax positions where the Company has determined there is a greater than 50% likelihood that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is determined there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit has been recognized. The Company had no uncertain tax positions during the years ended December 31, 2022, 2021, and 2020.
The Company recognizes interest and, if applicable, penalties for any uncertain tax positions. Interest and penalties are recorded as a component of income tax expense. In the years ended December 31, 2022 and 2021, the Company did not have any accrued interest or penalties associated with any unrecognized tax benefits.
The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted by the United States on March 27, 2020. The CARES Act did not have a material impact on the Company’s provision for income taxes for the years ended December 31, 2022, 2021, and 2020.
On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law. The IRA made several changes to the U.S. tax code effective after December 31, 2022, including, but not limited to, a 15% minimum tax on large corporations with average annual financial statement income of more than $1 billion for a three tax-year period and a 1% excise tax on public company stock buybacks, which will be accounted for in treasury stock. The Company does not expect these changes to have a material impact on its provision for income taxes or financial statements.