Annual report [Section 13 and 15(d), not S-K Item 405]

INCOME TAXES

v3.25.0.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2024
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 effective tax rate for 2024 and 2023, is as follows (in thousands):

 

 

 

Years Ended December 31,

 

 

 

2024

 

 

2023

 

U.S. statutory rate

 

 

21.0

%

 

 

21.0

%

Increase (decrease) resulting from:

 

 

 

 

 

 

Permanent differences

 

 

2.2

%

 

 

(1.0

)%

State income taxes

 

 

2.3

%

 

 

(0.3

)%

Discrete items

 

 

 

 

 

 

Vesting of common stock

 

 

(0.9

)%

 

 

(0.2

)%

Statutory rate change

 

 

5.4

%

 

 

—

%

Change in valuation allowance

 

 

(31.3

)%

 

 

(19.4

)%

Return to provision and other

 

 

0.9

%

 

 

0.1

%

Effective tax rate

 

 

(0.4

)%

 

 

0.2

%

Significant components of our income tax (expense) benefit for 2024 and 2023, were as follows (in thousands):

 

 

 

Years Ended December 31,

 

 

 

2024

 

 

2023

 

Current

 

 

 

 

 

 

Federal

 

$

—

 

 

$

—

 

State

 

 

(12

)

 

 

—

 

Total current

 

 

(12

)

 

 

—

 

Deferred

 

 

 

 

 

 

Federal

 

 

(3,418

)

 

 

4,933

 

State

 

 

(1,050

)

 

 

(24

)

Valuation allowance

 

 

4,531

 

 

 

(4,868

)

Total deferred

 

 

63

 

 

 

41

 

Income tax (expense) benefit

 

$

51

 

 

$

41

 

 

Deferred Taxes

Significant components of our deferred tax assets and liabilities at December 31, 2024 and 2023, were as follows (in thousands):

 

 

 

December 31,

 

 

 

2024

 

 

2023

 

Deferred tax assets

 

 

 

 

 

 

Leases

 

$

56

 

 

$

144

 

Employee benefits

 

 

1,479

 

 

 

1,499

 

Accrued losses on uncompleted contracts

 

 

2

 

 

 

77

 

Stock based compensation expense

 

 

336

 

 

 

373

 

Debt interest

 

 

469

 

 

 

516

 

Federal net operating losses

 

 

25,492

 

 

 

28,413

 

State net operating losses

 

 

2,284

 

 

 

3,407

 

R&D and other tax credits

 

 

1,070

 

 

 

1,037

 

Other

 

 

78

 

 

 

242

 

Total deferred tax assets

 

 

31,266

 

 

 

35,708

 

Deferred tax liabilities

 

 

 

 

 

 

Depreciation

 

 

(446

)

 

 

(564

)

Prepaid insurance

 

 

(487

)

 

 

(280

)

Total deferred tax liabilities

 

 

(933

)

 

 

(844

)

Net deferred tax assets

 

 

30,333

 

 

 

34,864

 

Valuation allowance

 

 

(30,333

)

 

 

(34,927

)

Net deferred taxes (1)

 

$

—

 

 

$

(63

)

 

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

At December 31, 2024 and 2023, we had total DTAs of $31.3 million and $35.7 million, respectively (including U.S. federal net operating losses (“NOL(s)”) DTAs of $25.5 million and $28.4 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, 2024, we believe the negative evidence outweighs the positive evidence with respect to our ability to realize our DTAs, and accordingly, at December 31, 2024 and 2023, we had VAs of $30.3 million and $34.9 million, respectively, offsetting our net DTAs.

At December 31, 2024, we had gross U.S. federal NOL carryforwards (excluding VAs) of $121.4 million, of which $28.6 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, 2024, we had gross state NOL carryforwards (excluding VAs) of $40.7 million, of which $1.3 million will expire from 2039 through 2041 and the remaining carryforwards can be carried forward indefinitely, subject to a 72% limitation on taxable income each year.

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, 2024 and 2023, 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 2020.