Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.22.4
Income Taxes
12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The provision for income taxes is recorded at the end of each interim period based on the Company’s best estimate of its effective income tax rate expected to be applicable for the full fiscal year. There is no provision for income taxes because the Company has incurred operating losses since inception. The Company’s effective income tax rate was 0% for the years ended December 31, 2022 and 2021 and the realization of any deferred tax assets is not more likely than not.
The components of the federal and state income tax provision included in the consolidated statements of operations are all attributable to continuing operations and are summarized as follows:
2022 2021
Current tax provision
Federal $ —  $ — 
State —  — 
Total current —  — 
Deferred tax provision    
Federal tax recovery —  — 
State —  — 
Total deferred —  — 
Provision for income taxes $ —  $ — 
The provision for (benefit from) income taxes differs from the amount that would be computed by applying the statutory federal income tax rate of 21% to income before income taxes as a result of the following:
2022 Percentages
Tax benefit computed at federal statutory rate $ 3,186  21.00  %
State income tax benefit, net of federal benefit (2,095) (13.81) %
Permanent items  
Change in fair value of warrant liabilities (19,866) (130.95) %
Incentive stock options 367  2.42  %
Transaction costs 83  0.55  %
162m limitation 0.04  %
Debt extinguishment 700  4.61  %
Other adjustments (1,151) (7.58) %
Valuation allowance 18,770  123.72  %
Total provision for income taxes $ —  —  %
Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes; and (b) operating losses and tax credit carryforwards. The tax effects of significant items comprising the Company’s deferred taxes are as follows:
2022 2021
Deferred tax assets:
Net operating loss $ 30,907  $ 15,366 
Derivative liability 1,713  3,421 
Operating lease liabilities 2,345  2,831 
Stock options 856  472 
Other 4,268  1,418 
Total deferred tax assets 40,089  23,508 
Deferred tax liabilities:    
Derivative debt discount (1,714) (3,421)
Right of use assets (1,933) (2,373)
Fixed assets (29) (119)
Beneficial conversion feature (49) — 
Total deferred tax liabilities (3,725) (5,913)
Net deferred tax assets 36,364  17,595 
Valuation allowance, net (36,364) (17,595)
Net deferred tax asset (liability) $ —  $ — 
ASC 740 requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is "more likely than not." Realization of the future tax benefits is dependent on the Company's ability to generate sufficient taxable income within the carryforward period. Because of the Company's recent history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a valuation allowance.
The Company’s federal net operating loss and tax credit carryforward as of December 31, 2022 was $122,437 and has no expiration date. The Company also files in various state jurisdictions and has net operating loss and tax credit carryforwards of $89,942 as of December 31, 2022 that will begin to expire in 2040 if not utilized.
The Company has no uncertain tax positions.