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Income Taxes

12 Months Ended

Dec. 31, 2022

Income Taxes

Income Taxes

12.         Income Taxes

The Company’s components of loss before income tax (in thousands) were as follows:

​	​	​	​	​	​	​	​
​	​	Year Ended December 31,					​
​		2022			2021
Domestic	​	$	(20,566)	​	$	(25,931)	​
Foreign	​	​	222	​	​	(3,186)	​
Loss before income tax	​	$	(20,344)	​	$	(29,117)	​

​

The Company’s components of income tax benefit (expense) (in thousands) were as follows:

​	​	​	​	​	​	​	​
​	​	Year Ended December 31,
​		2022			2021
Current federal benefit	​	$	9	​	$	21	​
Current state benefit	​		—	​		6	​
Deferred federal expense	​		(109)	​		(159)	​
Deferred state (expense) benefit	​		(7)	​		158	​
Income tax (expense) benefit	​	$	(107)	​	$	26	​

​

The income tax provision (in thousands) differs from the amount computed by applying the statutory federal income tax rate to loss before income tax as follows:

​	​	​	​	​	​	​	​
​	​	Year Ended December 31,					​
​		2022			2021
Tax benefit computed at statutory rate of 21%	​	$	4,272	​	$	6,047	​
Change in valuation allowance	​		15,352	​		(6,632)	​
State income tax (expense) benefit, net of federal tax	​		(5)	​		130	​
Foreign losses	​		70	​		706	​
Section 382 limited NOL	​	​	(19,904)	​	​	—	​
Other	​		108	​		(225)	​
Income tax (expense) benefit	​	$	(107)	​	$	26	​

​

The CARES Act was enacted on March 27, 2020 resulting in tax law changes that impacted the Company by accelerating the AMT credit owed to the Company and allowed for a temporary change in NOL taxable income limitations. For tax years beginning January 1, 2018 and those prior to 2021, an NOL deduction equal to 100% of taxable income is allowed. Tax years 2021 and forward will revert back to the 80% limitation established by the 2017 Tax Cuts and Jobs

Act. The Consolidated Appropriations Act, 2021 (“The ACT”) was enacted by Congress on December 27, 2020. The ACT did not have a material impact to the Company’s consolidated financial statements.

The principal components of the Company’s net deferred tax assets (liabilities) (in thousands) were as follows:

​	​	​	​	​	​	​
​		December 31,
​		2022			2021
Deferred tax assets:	​	​	​	​	​	​
Federal tax net operating loss ("NOL") carryforward	​	$	13,373	​	$	30,649
Foreign tax NOL carryforward	​		6,423	​		6,947
State tax NOL carryforward	​		1,398	​		2,194
Other comprehensive income	​	​	458	​	​	235
Deferred revenue	​	​	379	​	​	—
Foreign deferred taxes	​		252	​		197
Right-of-use assets	​	​	80	​	​	125
Canadian start-up costs	​	​	74	​	​	90
Restricted stock and restricted stock unit awards	​		—	​		55
Other	​		52	​		48
Self-insurance	​		37	​		45
Workers’ compensation	​		8	​		11
Gross deferred tax assets	​	​	22,534	​	​	40,596
Less valuation allowances	​		(21,184)	​		(37,571)
Net deferred tax assets	​	​	1,350	​	​	3,025
Deferred tax liabilities:	​	​	​	​	​	​
Property and equipment	​		(1,486)	​		(3,045)
Net deferred tax liabilities	​	$	(136)	​	$	(20)
​	​	​	​	​	​	​
Domestic deferred tax liabilities	​	$	(136)	​	$	(20)
Foreign deferred tax liabilities	​	​	—	​	​	—
Net deferred tax liabilities	​	$	(136)	​	$	(20)

​

At December 31, 2022, the Company had a gross NOL for U.S. federal income tax purposes of approximately $158,460,000 but expects approximately $94,779,000 to expire unused due to the 382 event discussed below. The remaining NOL will begin to expire in 2027. Losses incurred after the year ended December 31, 2017 have no expiration. The Company will carry forward the tax benefits related to federal net NOL of approximately $13,373,000. The Company also had state net NOLs that will affect state taxes of approximately $1,398,000 at December 31, 2022. State NOLs began to expire in 2015 and continue to expire each year. The Company also had a Canadian gross NOL of $24,702,000 that will begin to expire in 2037.

On January 14, 2022, the Company was subject to an Internal Revenue Code section 382 event that limited some of our NOL utilization in future periods. The 382 limitation rendered a substantial portion of the NOLs unusable and caused the Company to write off approximately $19,904,000 of the federal net NOLs against the valuation allowance. It also caused the Company to adjust the valuation allowance so we are still in a naked credit position domestically, but it did not have a material impact on tax expense.

In evaluating the possible sources of taxable income during 2022, the Company determined it is more likely than not that the remaining deferred tax assets will not be realizable. As a result, the Company recorded full valuation allowance against foreign deferred tax assets and its federal and state deferred tax assets with the exception of its trademark intangible.

At December 31, 2022 and 2021, the Company did not have any uncertain tax positions. The Company’s policy is to recognize interest and penalties related to an uncertain tax position in income tax expense.

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- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

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