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Note 9 - Income Taxes
 12 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

 

 

 

NOTE 9 – INCOME TAXES

 

Deferred taxes are recorded based upon differences between the financial statement and tax basis of assets and liabilities and available carryforwards. Temporary differences and carryforwards which gave rise to a significant portion of deferred tax assets and liabilities as of December 31, 2023 and 2022 are as follows (dollars in thousands):

 

  

December 31,

 
  

2023

  

2022

 
         

Deferred tax assets:

        

Net operating losses

 $75,727  $69,537 

Fixed asset basis difference

  4,738   4,599 

Contributions carryover

  29   48 

Deferred compensation

  157   695 

Accrued liabilities and other

  796   358 
         

Total deferred tax assets

  81,447   75,237 
         

Valuation allowance for deferred tax assets

  (81,447)  (75,237)
         

Net deferred tax asset

 $-  $- 

 

The change in deferred tax assets resulted from current year net operating losses and changes to future tax deductions resulting from expiring net operating losses, terms of stock compensation plans, fixed assets, and accrued liabilities. A full valuation allowance continues to be recorded given the Company continues to be incurring losses.

 

As of December 31, 2023, the Company had net operating loss (NOL) carryforwards of approximately $334 million for federal income tax purposes and $309 million for California income tax purposes. Such carryforwards expire in varying amounts through the year 2037 and 2043 for federal and California purposes, respectively. For federal losses arising in tax years ending after December 31, 2017, the NOL carryforwards are allowed indefinitely. Use of the carryforward amounts is subject to an annual limitation as a result of a previous ownership change and a tax ownership change that occurred in June of 2021.

 

The Company’s tax years 2020 through 2023 remain subject to examination by the Internal Revenue Service, and tax years 2019 through 2023 remain subject to examination by California tax jurisdictions. In addition, the Company’s loss carryforward amounts are generally subject to examination and adjustment for a period of three years for federal tax purposes and four years for California purposes, beginning when such carryovers are utilized to reduce taxes in a future tax year.

 

 

 

A reconciliation of the income tax benefit to the statutory federal income tax rate is as follows (dollars in thousands):

 

  

2023

  

2022

 
         

Expected federal income tax benefit at 21%

 $(6,602) $(5,205)

Increase (decrease) in valuation allowance

  4,433   3,906 

State income tax

  11   7 

Expiring carryforwards

  933   577 

Non-deductible expenses and other

  1,236   722 
         

Income tax expense

 $11  $7 

 

Because it is more likely than not that the Company will not realize its net deferred tax assets, it has recorded a full valuation allowance against these assets. Accordingly, no deferred tax asset has been recorded in the accompanying balance sheet.