XML 40 R21.htm IDEA: XBRL DOCUMENT v3.23.1
Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 14 – INCOME TAXES

As of December 31, 2022, the Company had consolidated income tax net operating loss ("NOL") carryforwards for federal tax purposes of approximately $230.0 million and net operating loss carryforwards for foreign income tax purposes of approximately $83.5 million. The federal NOL carryforwards from 2005 and forward will expire in various years beginning 2025 and ending through the year 2035. From 2025 through 2027, approximately $47.0 million of the NOL will expire, and from 2028 through 2037, approximately $128.0 million of the NOL will expire. The NOL generated in 2018 through 2021 of approximately $55.0 million will be carried forward indefinitely.

The components of the provision for income tax (benefits) are attributable to continuing operations as follows:

 

 

December 31, 2022

 

December 31, 2021

 

December 31, 2020

 

Current

 

 

 

 

 

 

Federal

$

—

 

$

—

 

$

—

 

State

 

—

 

 

—

 

 

—

 

 

$

—

 

$

—

 

$

—

 

Deferred

 

 

 

 

 

 

Federal

$

—

 

$

—

 

$

—

 

State

 

—

 

 

—

 

 

—

 

 

$

—

 

$

—

 

$

—

 

 

Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:

 

 

December 31, 2022

December 31, 2021

Deferred tax assets:

 

 

Net operating loss and tax credit carryforwards

$83,383,006

$72,201,754

Capital loss carryforward

—

5,514

Accrued expenses

—

363,149

Start-up costs

6,033

5,664

Excess of book over tax depreciation

240,231

259,667

Stock option and restricted stock award expense

1,806,546

1,429,488

Debt Extinguishment

61,945

58,161

Less: valuation allowance

(85,268,067)

(74,138,667)

 

$229,694

$184,730

Deferred tax liability:

 

 

Property and equipment basis

$50,174

$10,434

Prepaid expenses

179,520

174,296

 

$229,694

$184,730

Net deferred tax asset

$—

$—

 

As reflected above, we have recorded a net deferred tax asset of $0 at December 31, 2022. As required by the Accounting for Income Taxes topic in the ASC, we have evaluated whether it is more likely than not that the deferred tax assets will be realized.

Based on the available evidence, we have concluded that it is more likely than not that those assets would not be realized without the recovery and rights of ownership or salvage rights of high-value shipwrecks or other forms of taxable income, thus a valuation allowance has been recorded as of December 31, 2022.

The change in the valuation allowance is as follows:

 

December 31, 2022

$

85,268,067

 

December 31, 2021

 

74,138,667

 

Change in valuation allowance

$

11,129,400

 

 

The federal and state income tax provision (benefit) is summarized as follows for the years ended:

 

 

December 31, 2022

 

December 31, 2021

 

December 31, 2020

 

Expected (benefit)

$

(6,485,498

)

$

(3,386,834

)

$

(4,429,419

)

Effects of:

 

 

 

 

 

 

State income taxes net of federal benefits

 

(1,698,583

)

 

(570,116

)

 

(940,302

)

Nondeductible expense

 

78,422

 

 

(56,839

)

 

150,238

 

Subpart F Income

 

33,040

 

 

735,229

 

 

345,006

 

Debt Extinguishment

 

—

 

 

—

 

 

91,266

 

Funder Loan Proceeds

 

—

 

 

—

 

 

2,482,252

 

Change in valuation allowance

 

11,480,322

 

 

6,229,371

 

 

4,815,784

 

Foreign Rate Differential

 

(3,407,703

)

 

(2,950,811

)

 

(2,514,825

)

 

$

—

 

$

—

 

$

—

 

 

The Company’s effective income tax rate is lower than what would be expected if the federal statutory rate were applied to income before income taxes primarily because of certain expenses deductible for financial reporting purposes that are not deductible for tax purposes, research and development tax credits, operating loss carryforwards, and adjustments to previously-recorded deferred tax assets and liabilities due to the enactment of the Tax Cuts and Jobs Act.

We have not recognized a material adjustment in the liability for unrecognized tax benefits and have not recorded any provisions for accrued interest and penalties related to uncertain tax positions.

The earliest tax year still subject to examination by a major taxing jurisdiction is 2018.