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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
INCOME TAXES [Abstract]  
INCOME TAXES

11.

INCOME TAXES

 

The components of the Company’s income tax expense (benefit) are as follows:


 

  

Year Ended December 31,

  
    (In thousands)
 

 

   2024
     2023
     2022
  
Current:
              
 
Federal
   $ 10,434     $ -     $ -  
State
     1,887       -       -  
Total current
     12,321       -       -  
Deferred:
                    
 
Federal
     (72,858 )     -       -  
State
     (11,422 )     -       -  
Total deferred
     (84,280 )     -       -  
Total benefit from income taxes
   $ (71,959 )   $ -     $ -  


A reconciliation of income taxes at the U.S. federal statutory rate to the benefit for income taxes is as follows:

 

 

  

Year Ended December 31,

  
    (In thousands)
 

 

   2024
     2023
     2022
  

Tax provision (benefit) at U.S. federal statutory rate

   $ 26,400     $ (5,930 )   $ (13,840 )

State taxes, net of federal benefit

     (9,931 )     (763 )     (1,773 )
Non-deductible executive compensation
    
4,340
       983       862
  
Excess tax benefits related to stock-based compensation
     (5,661 )     -       -
  

Change in valuation allowance

     (87,969 )     4,696       15,117  

Other

     862       1,014       (366 )

Benefit for income taxes

   $ (71,959 )   $ -     $ -  

   

The significant components of the Company’s deferred tax assets are as follows:

 

 

  

Year Ended December 31,

  

 

  

2024

    

2023

  
Deferred tax assets:
  (in thousands)
 

Federal and state net operating loss carryforwards

   $ 65,615     $ 76,645  

Interest expense limitation carryforwards

     13,604       21,165  

Inventory

     3,911       2,937  

Stock-based compensation

     2,523       1,795  
Lease obligations
    2,549       2,330  

Accrued expenses and other

     5,779       5,831  

Total gross deferred tax assets

     93,981       110,703  

Less: valuation allowance for deferred tax assets

     -       (101,422 )
Total deferred tax assets, net of valuation allowance
     93,981
       9,281
  
Deferred tax liabilities:
                
Depreciation of property and equipment
    (6,166 )     (6,837 )
Right-of-use assets
     (2,247 )     (2,077 )
Other deferred tax liabilities
    (1,288 )     (367 )
Total deferred tax liabilities
    (9,701 )     (9,281 )

Net deferred tax assets

   $ 84,280     $ -  

 

As of December 31, 2024, the Company has federal and state (post-apportioned basis) net operating losses (“NOLs”) of $265.6 million and $204.0 million, respectively. Approximately $33.4 million and $62.0 million of the foregoing Federal and state NOLs, respectively, will expire at various dates from 2029 through 2043, if not limited by triggering events prior to such time. Under the provisions of the Internal Revenue Code, changes in ownership of the Company, in certain circumstances, would limit the amount of federal NOLs that can be utilized annually in the future to offset taxable income. In particular, Section 382 of the Internal Revenue Code (“Section 382”) imposes limitations on an entity’s ability to use NOLs upon certain changes in ownership. If the Company is limited in its ability to use its NOLs in future years in which it has taxable income, then the Company will pay more taxes than if it were otherwise able to fully utilize its NOLs. The Company may experience ownership changes in the future as a result of subsequent shifts in ownership of the Company’s capital stock that the Company cannot predict or control that could result in further limitations being placed on the Company’s ability to utilize its Federal NOLs. The annual amount of Federal NOLs that expire each year is as follows (in thousands):


Expiration Date  
   Remaining Available 
 
2031     $
2,409  
2032

   
 7,430
 2033
    11,295  
 2034
    1,025  
 2035
    1,025  
 2036
    1,025  
 2037
    9,157  
 Indefinite
    232,240
 Total
  $ 265,606
  


A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. When determining the amount of net deferred tax assets that are more likely than not to be realized, the Company assesses all available positive and negative evidence. This evidence includes, but is not limited to, prior earnings history, expected future earnings, carry-back and carry-forward periods and the feasibility of ongoing tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. The weight given to the positive and negative evidence is commensurate with the extent the evidence may be objectively verified.


As of December 31, 2024, the Company believes it is more-likely-than-not that the Company’s federal and state deferred tax assets will be realized. The Company recorded a release of its valuation allowance associated with federal and state deferred tax assets which was due in part to achieving three years of cumulative taxable income and projected taxable income that is more than adequate to realize the Company’s federal and state deferred tax assets. As a result, the Company reversed the federal and state valuation allowance recorded as of December 31, 2023 of $88.0 million and $13.4 million, respectively, resulting in a tax benefit to the income tax provision for the year ended December 31, 2024.


In accordance with U.S. GAAP, the Company is required to determine whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. Derecognition of a tax benefit previously recognized could result in the Company recording a tax liability that would reduce net assets. The amount of the liability for which an exposure exists is measured as the largest amount of benefit determined on a cumulative probability basis that the Company believes is more likely than not to be realized upon ultimate settlement of the position. Components of the liability are classified as either a current or a long-term liability in the accompanying consolidated balance sheets based on when the Company expects each of the items to be settled. The Company does not have any unrecognized tax benefits as of December 31, 2024 and 2023 and does not anticipate a significant change in unrecognized tax benefits during the next 12 months.


The Company files income tax returns in the U.S. federal and various state jurisdictions. All net operating losses and tax credits generated to date are subject to adjustment for U.S. federal and state income tax purposes. The Company’s income tax returns are open to examination for tax years 2007 through 2023.