Grove Collaborative, Inc. Annual report pursuant to Section 13 and 15(d)

Provision for Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

The Company’s effective income tax rate reconciliation is composed of the following for the periods presented:


	Year Ended December 31,
	2022		2021		2020
Federal statutory rate	21.0	%	21.0	%	21.0	%
Stock-based compensation	(7.3)	%	(0.6)	%	(1.7)	%
Remeasurement of derivative liabilities	17.5	%	(0.2)	%	(0.3)	%
Other	0.4	%	—	%	0.5	%
Change in valuation allowance	(31.6)	%	(20.2)	%	(19.5)	%
Provision for income taxes	—	%	—	%	—	%

The components of net deferred tax assets are as follows (in thousands):


	December 31,
	2022		2021
Deferred tax assets:
Net operating loss carryforwards	$	119,345	$	95,311
Deferred revenue	2,581		2,665
Inventory reserve and uniform capitalization	3,365		2,795
Operating lease liabilities	4,720		5,576
Accruals and other reserves	1,876		1,908
Stock-based compensation	6,856		4,339
Other	5,108		3,103
Total deferred tax assets	143,851		115,697
Less: valuation allowance	(139,033)		(107,300)
Total deferred tax assets, net of valuation allowance	4,818		8,397
Deferred tax liabilities:
Operating lease right-of-use assets	(2,933)		(5,017)
Depreciation and amortization	(1,885)		(3,380)
Total deferred tax liabilities	(4,818)		(8,397)
Net deferred tax assets	$	—	$	—

The following summarizes the activity related to valuation allowances on deferred tax assets:


	December 31,
	2022		2021
Valuation allowance, as of beginning of year	$	107,300	$	75,061
Valuation allowance established	31,271		32,511
Changes to existing valuation allowances	462		(272)
Valuation allowance, as of end of year	$	139,033	$	107,300

The Company’s unrecognized tax benefits are as follows (in thousands):


	December 31,
	2022		2021
Balance at beginning of year	$	40	$	35
Decrease related to prior period tax positions	—		—
Increase related to current year tax positions	—		5
Balance at end of year	$	40	$	40