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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The domestic and foreign components of (loss) income before provision for income taxes on continuing operations were as follows:
Year Ended December 31,
202420232022
Domestic$(33,156)$(59,254)$(108,766)
Foreign(138)5,144 (6,063)
Total loss before income taxes$(33,294)$(54,110)$(114,829)
The provision / (benefit) for income taxes on continuing operations consisted of the following:
Year Ended December 31,
202420232022
Current provision / (benefit)
Federal$— $— $2 
State49 92 77 
Foreign956 (1,689)2,756 
Total current provision / (benefit)$1,005 $(1,597)$2,835 
Deferred (benefit) / provision
Federal$1 $3 $726 
State11 (4)230 
Foreign(355)3,200 (1,061)
Total deferred (benefit) / provision$(343)$3,199 $(105)
Total provision / (benefit)
Federal$1 $3 $728 
State60 88 307 
Foreign601 1,511 1,695 
Total provision / (benefit)$662 $1,602 $2,730 
A reconciliation of the U.S. federal statutory income tax rate on continuing operations of 21% for the years ended December 31, 2024, 2023, and 2022 to the Company’s effective tax rate is as follows:
Year Ended December 31,
202420232022
Income tax (benefit) provision at the U.S. federal statutory rate$(6,974)$(11,363)$(24,114)
State income taxes(793)(1,331)(1,045)
Permanent differences157 (50)380 
Change in valuation allowance8,230 10,580 12,397 
Effect of foreign operations171 1,837 (147)
Stock-based compensation733 1,728 4,205 
Section 162(m)261 221 493 
Derivative and warrant liabilities288 (36)(1,940)
U.S. GILTI inclusion(511)511 139 
Goodwill impairment— — 10,615 
Effect of change in tax rates667 6 58 
Research and development tax credits(2,135)— — 
Foreign currency translation and transactions356 (237)560 
Other212 (264)1,129 
Total provision (benefit) for income taxes$662 $1,602 $2,730 
For the years ended December 31, 2024, 2023, and 2022, the Company’s effective tax rate was (2.0)%, (3.0)% and (2.4)% respectively. For the years ended December 31, 2024 and December 31, 2023, the Company’s effective tax rate differed from the U.S. federal statutory income tax rate of 21% primarily related to a research and development tax credit and a valuation allowance against net deferred tax assets that were not realizable on a more-likely-than-not basis. For the year ended December 31, 2022, the Company’s effective tax rate differed from the U.S. federal statutory income tax rate of 21% primarily related to both a valuation allowance against net deferred tax assets that were not realizable on a more-likely-than-not basis and the impairment of non-deductible goodwill for which no tax benefit was provided.
In August 2022, the Inflation Reduction Act and CHIPS and Science Act were both enacted. This new legislation included the implementation of a new corporate alternative minimum tax, an excise tax on stock buybacks, and tax incentives for energy and climate initiatives, among other provisions. The income tax provisions of the legislation had limited applicability to the Company and did not have a material impact on the Company’s consolidated financial statements.
On October 8, 2021, the Organization for Economic Co-operation and Development (“OECD”) released a statement on the OECD / G20 Inclusive Framework on Base Erosion and Profit Sharing, which agreed to a two-pillar solution to address tax challenges of the digital economy. On December 20, 2021, the OECD released “Pillar Two” model rules defining a 15% global minimum tax rate for large multinational corporations with consolidated revenue above €750 million (or approximately $781.2 million as of December 31, 2024). The Company continues to evaluate the Pillar Two Framework and its potential impact on future periods; however, based on the current proposed revenue thresholds, the Company does not expect to be subject to tax changes associated with Pillar Two.
Significant components of deferred tax assets and liabilities as of December 31, 2024 and 2023 were as follows:
Year Ended December 31,
20242023
Deferred tax assets
Net operating loss carryforwards$115,007 $104,168 
Accruals2,248 2,119 
Stock-based compensation747 1,083 
Bad debt182 255 
Interest expense5,220 3,630 
Lease liabilities9,069 14,442 
Section 174 capitalized R&D costs9,521 13,057 
Capitalized production expenses213 330 
Other1,803 1,733 
Total deferred tax asset$144,010 $140,817 
Valuation allowance(125,613)(117,526)
Net deferred tax asset$18,397 $23,291 
Deferred tax liabilities
Deferred state income tax(3,208)(3,174)
Operating lease, right-of-use asset(6,960)(11,334)
Depreciation and amortization— (710)
Intangible assets(7,938)(8,105)
Total deferred tax liability$(18,106)$(23,323)
Net deferred tax asset (liability)$291 $(32)
Net deferred tax assets are included within prepaid expenses and other assets, and net deferred tax liabilities are included within other liabilities on the Company’s consolidated balance sheets.
In assessing the realizability of its deferred tax assets, the Company considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based upon the weight of available evidence, the Company concluded it is more likely than not that it will not be able to realize its U.S. deferred tax assets and therefore has maintained a full valuation allowance on its U.S. deferred tax assets. In addition, the Company maintains a valuation allowance against certain deferred tax assets in the United Kingdom (the “U.K.”), Spain, Japan, Australia, and Canada. The Company’s valuation allowance increased by approximately $8.1 million in 2024.
As of December 31, 2024, the Company has U.S. federal and state net operating losses (i.e., “NOLs”) of approximately $298.5 million and $11.6 million, respectively. A portion of the NOL carryforwards was utilized to offset
taxable income related to discontinued operations. During the year ended December 31, 2024, the Company applied $88.9 million of NOL carryforwards against the taxable gain recognized from the Complex Disposition and the First We Feast Disposition, reducing the total tax liability from discontinued operations by approximately $18.5 million. Of the $298.5 million of U.S. federal NOL carryforwards, $201.5 million expire in tax year beginning 2030 through 2037 if not utilized and $97.0 million that have an indefinite lived carryforward period, but are only available to offset 80% of future taxable income. The $11.6 million of state NOL carryforwards will expire in tax years beginning in 2025 to 2044 if not utilized. As of December 31, 2024, the Company has foreign NOL carryforwards of $2.8 million in Canada expiring in 2041 through 2043, $3.4 million in Japan expiring in 2026 through 2033, $1.3 million in Spain, $14.9 million in the U.K., and $0.8 million in Australia, all with indefinite carryforward periods. Utilization of NOLs and tax credit carryforwards are subject to certain limitations under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), in the event of a change in the Company’s ownership, as defined in current income tax regulations.
As of December 31, 2024, the Company has federal and state deferred interest expense carryforwards under Section 163(j) of the Code of $21.0 million and $0.4 million, respectively, which may be carried forward indefinitely but only available to offset 30% of tax adjusted earnings before interest and taxes (EBIT). In addition, the Company had federal research and development tax credits of approximately $7.5 million, which expire in the tax years beginning in 2032 through 2040, if not utilized. A portion of the research and development tax credits of $2.1 million was utilized to offset taxable income related to discontinued operations.
Notwithstanding the current taxation of certain foreign subsidiaries under global intangible low-taxed income (i.e., “GILTI”) and one-time transition taxation enacted as part of the Tax Cut and Jobs Act, the Company intends to continue to reinvest its foreign earnings indefinitely outside the U.S. If these future earnings are repatriated to the U.S., or if the Company determines that such earnings will be remitted in the foreseeable future, the Company may be required to accrue U.S. deferred taxes (if any) and applicable withholding taxes. It is not practicable to estimate the tax impact of the reversal of the outside basis difference, or the repatriation of cash due to the complexity of its hypothetical calculation.
The Company applies the applicable authoritative guidance which prescribes a comprehensive model in which a company should recognize, measure, present, and disclose in its financial statements all material uncertain tax positions that the Company has taken or expects to take on a tax return. The Company recognizes interest and penalties related to income tax positions taken on the Company’s tax returns in income tax expense in the consolidated statements of operations. As of December 31, 2024 and 2023, the Company recorded an uncertain tax position of $nil including interest and penalties related to state taxes. As of December 31, 2024 and 2023, the Company had accrued minimal uncertain tax positions.
The Company, or one of its subsidiaries, files its tax returns in the U.S. and certain state and foreign income tax jurisdictions with varying statute of limitations. The earliest years’ tax returns filed by the Company that are still subject to examination by the tax authorities in the major jurisdictions are as follows:
Years
United States2020
United Kingdom2023
Japan2019
Canada2020