Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v3.24.0.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES

5. INCOME TAXES

Income Tax (Expense) Benefit

A reconciliation of the U.S. federal statutory tax rate to our income tax (expense) benefit for 2023 and 2022, is as follows (in thousands):

 

 

 

Years Ended December 31,

 

 

 

2023

 

 

2022

 

U.S. statutory rate

 

 

21.0

%

 

 

21.0

%

Increase (decrease) resulting from:

 

 

 

 

 

 

Permanent differences

 

 

(1.0

)%

 

 

(5.1

)%

State income taxes

 

 

(0.3

)%

 

 

5.7

%

Discrete items

 

 

 

 

 

 

Vesting of common stock

 

 

(0.2

)%

 

 

(1.0

)%

Change in valuation allowance

 

 

(19.4

)%

 

 

(23.1

)%

Return to provision and other

 

 

0.1

%

 

 

1.8

%

Income tax (expense) benefit

 

 

0.2

%

 

 

(0.7

)%

Significant components of our income tax (expense) benefit for 2023 and 2022, were as follows (in thousands):

 

 

 

Years Ended December 31,

 

 

 

2023

 

 

2022

 

Current

 

 

 

 

 

 

Federal

 

$

—

 

 

$

—

 

State

 

 

—

 

 

 

—

 

Total current

 

 

—

 

 

 

—

 

Deferred

 

 

 

 

 

 

Federal

 

 

4,933

 

 

 

556

 

State

 

 

(24

)

 

 

166

 

Valuation allowance

 

 

(4,868

)

 

 

(745

)

Total deferred

 

 

41

 

 

 

(23

)

Income tax (expense) benefit

 

$

41

 

 

$

(23

)

 

Deferred Taxes

Significant components of our deferred tax assets and liabilities at December 31, 2023 and 2022, were as follows (in thousands):

 

 

 

December 31,

 

 

 

2023

 

 

2022

 

Deferred tax assets

 

 

 

 

 

 

Leases

 

$

144

 

 

$

221

 

Employee benefits

 

 

1,499

 

 

 

1,465

 

Accrued losses on uncompleted contracts

 

 

77

 

 

 

2,076

 

Stock based compensation expense

 

 

373

 

 

 

351

 

Debt interest

 

 

516

 

 

 

-

 

Federal net operating losses

 

 

28,413

 

 

 

22,444

 

State net operating losses

 

 

3,407

 

 

 

3,493

 

R&D and other tax credits

 

 

1,037

 

 

 

1,013

 

Other

 

 

242

 

 

 

481

 

Total deferred tax assets

 

 

35,708

 

 

 

31,544

 

Deferred tax liabilities

 

 

 

 

 

 

Depreciation

 

 

(564

)

 

 

(1,051

)

Prepaid insurance

 

 

(280

)

 

 

(497

)

Total deferred tax liabilities

 

 

(844

)

 

 

(1,548

)

Net deferred tax assets

 

 

34,864

 

 

 

29,996

 

Valuation allowance

 

 

(34,927

)

 

 

(30,100

)

Net deferred taxes (1)

 

$

(63

)

 

$

(104

)

 

(1)
Amounts are included in other noncurrent liabilities on our Balance Sheet.

At December 31, 2023 and 2022, we had total DTAs of $35.7 million and $31.5 million, respectively (including U.S. federal net operating losses (“NOL(s)”) DTAs of $28.4 million and $22.4 million, respectively). On a periodic and ongoing basis, we evaluate our DTAs (including our NOL DTAs) and assess the appropriateness of our valuation allowance(s) (“VA(s)”). In assessing the need for a VA, we consider both positive and negative evidence related to the likelihood of realizing our DTAs. If, based upon the available evidence, our assessment indicates that it is more likely than not that some or all of the DTAs will not be realized, we record a VA. Our assessments include, among other things, the amount of taxable temporary differences that will result in future taxable income, the value and quality of our backlog, evaluations of existing and anticipated market conditions, analysis of recent and historical operating results (including cumulative losses over multiple periods) and projections of future results and strategic plans, as well as asset expiration dates. As a result of our assessment and due to cumulative losses for the three years ended December 31, 2023, we believe the negative evidence outweighs the positive evidence with respect to our ability to realize our DTAs, and accordingly, at December 31, 2023 and 2022, we had VAs of $34.9 million and $30.1 million, respectively, offsetting our total DTAs.

At December 31, 2023, we had gross U.S. federal NOL carryforwards (excluding VAs) of $135.3 million, of which $42.3 million will expire in 2037 with the remaining U.S. federal NOL carryforwards eligible to be carried forward indefinitely, subject to an 80% limitation on taxable income in each year. At December 31, 2023, we had gross state NOL carryforwards (excluding VAs) of $45.2 million, which will expire from 2035 through 2041.

Uncertain Tax Positions

Reserves for uncertain tax positions are recognized when we consider it more likely than not that additional tax will be due in excess of amounts reflected in our income tax returns, irrespective of whether or not we have received tax assessments. Interest and penalties on uncertain tax positions are recorded within income tax expense. At December 31, 2023 and 2022, we had no material reserves for uncertain tax positions. Tax returns subject to examination by the U.S. Internal Revenue Service are open for years after 2019.