XML 202 R34.htm IDEA: XBRL DOCUMENT
v3.24.3

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2023
Income Tax Disclosure [Abstract] |
INCOME TAXES | 27. INCOME TAXES The following is a geographical breakdown of income/loss before the provision for income tax, for the years ended December 31, 2023 and 2022:
Schedule of income loss before the provision for income tax |  |  |  |  |  |  |  |
|  | 2023 |  |  | 2022 |
Pre-tax loss |  |  |  |  |  |  |  |
U.S. Federal |  | $ | (256,824,000 | ) |  | $ | (189,899,000 | )
Foreign |  |  | 867,000 |  |  |  | (4,419,000 | )
Total |  | $ | (255,957,000 | ) |  | $ | (194,318,000 | )
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. Significant components of the Company’s deferred tax assets are as follows:
Schedule of deferred tax assets |  |  |  |  |  |
|  | 2023 |  |  | 2022 |
Deferred tax asset: |  |  |  |  |  |  |  |
Allowance for doubtful accounts |  | $ | 315,000 |  |  | $ | 439,000 |
Unrealized losses |  |  | 13,859,000 |  |  |  | 11,082,000 |
Obsolete inventory |  |  | 1,996,000 |  |  |  | 2,816,000 |
Stock compensation |  |  | 13,383,000 |  |  |  | 3,581,000 |
Other carryforwards |  |  | 311,000 |  |  |  | 317,000 |
Net operating loss carryforwards |  |  | 94,899,000 |  |  |  | 17,878,000 |
Lease liability |  |  | 1,224,000 |  |  |  | 1,979,000 |
Impairment |  |  | 29,702,000 |  |  |  | 22,822,000 |
Accrued expenses |  |  | 2,360,000 |  |  |  | 3,648,000 |
Interest expense |  |  | 14,713,000 |  |  |  | 8,668,000 |
Outside basis difference |  |  | 9,308,000 |  |  |  | - |
Other |  |  | 2,095,000 |  |  |  | 404,000 |
Total deferred tax asset |  |  | 184,165,000 |  |  |  | 73,634,000 |
Deferred tax liability: |  |  |  |  |  |  |  |
Right-of-use assets |  |  | (1,112,000 | ) |  |  | (1,865,000 | )
Fixed assets, net |  |  | (15,289,000 | ) |  |  | (1,575,000 | )
Intangible assets, net |  |  | 42,000 |  |  |  | (6,638,000 | )
Bargain gain/loss |  |  | - |  |  |  | (225,000 | )
Total deferred income tax liabilities |  |  | (16,359,000 | ) |  |  | (10,303,000 | )
Net deferred income tax assets |  |  | 167,806,000 |  |  |  | 63,331,000 |
Valuation allowance |  |  | (167,806,000 | ) |  |  | (63,304,000 | )
Deferred tax asset (liability), net |  |  | - |  |  | $ | 27,000 |
At December 31, 2023, the Company had federal net operating loss carryforwards (“NOLs”) for income tax purposes of approximately $215.4 million related to the year after December 31, 2017 that does not have an expiration under current tax law and $132.5 million that expire between 2024 and 2037 after application of limitation set forth in Section 382 of the Internal Revenue Code (“§382”). The Company had state NOLs for income tax purposes of approximately $251.6 million as of December 31, 2023. The state NOLs may be used to offset future taxable income and will begin to expire in 2038, unless previously utilized. In accordance with §382, future utilization of the Company’s NOLs is subject to an annual limitation as a result of ownership changes that occurred previously. The Company also maintains NOLs in various foreign jurisdictions. At December 31, 2023, Ault Disruptive, an entity not consolidated for income tax purposes, utilized its remaining NOLs. The Company has not completed a formal §382 study and completion of such an analysis in future periods may yield income tax provision impacts in subsequent financial statements. In assessing the realization of deferred tax assets, management considers whether it is more likely than not some portion or all deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax assets, projected future taxable income and tax planning strategies in making this assessment. After consideration of all positive and negative evidence, including the Company’s generation of NOLs in current and prior periods, there is substantial doubt regarding the Company’s ability to utilize its deferred tax assets, therefore, the Company recorded a full valuation allowance. For the year ended December 31, 2023, the valuation allowance increased by $104.5 million. The net income tax provision (benefit) consisted of the following:
Schedule of reconciliation of income tax attributable to operations |  |  |  |  |  |
|  | 2023 |  |  | 2022 |
Current |  |  |  |  |  |  |  |
U.S. Federal |  | $ | 221,000 |  |  | $ | 244,000 |
U.S. State |  |  | (99,000 | ) |  |  | 143,000 |
Foreign |  |  | 188,000 |  |  |  | 132,000 |
Total current provision |  |  | 310,000 |  |  |  | 519,000 |
Deferred |  |  |  |  |  |  |  |
U.S. Federal |  |  | 0 |  |  |  | (4,977,000 | )
U.S. State |  |  | 27,000 |  |  |  | (27,000 | )
Foreign |  |  | 0 |  |  |  | 0 |
Total deferred provision (benefit) |  |  | 27,000 |  |  |  | (5,004,000 | )
Total provision (benefit) for income taxes |  | $ | 337,000 |  |  | $ | (4,485,000 | )
The Company’s effective tax rates were (0.3)% and 2.3% for the years ended December 31, 2023 and 2022, respectively. During the year ended December 31, 2023, the effective tax rate differed from the U.S. federal statutory rate primarily due to the change in valuation allowance. The reconciliation of income tax attributable to operations computed at U.S. Federal statutory income tax rates of 21% to income tax expense is as follows:
Schedule of effective income tax rate reconciliation |  |  |  |  |  |
|  | 2023 |  |  | 2022 |
Expected federal income tax benefit |  |  | 21.0 | % |  |  | 21.0 | %
State taxes net of federal benefit |  |  | -1.1 | % |  |  | 7.3 | %
Effect of change in valuation allowance |  |  | -15.8 | % |  |  | -22.1 | %
Permanent differences |  |  | 1.0 | % |  |  | -1.0 | %
Goodwill impairment |  |  | -2.3 | % |  |  | -1.4 | %
IRC Section 162(m) compensation limitation |  |  | 0.0 | % |  |  | -0.3 | %
Excess tax benefit - windfall/(shortfall) |  |  | -0.2 | % |  |  | -0.2 | %
Guarantee loss |  |  | -2.9 | % |  |  | - |
Other |  |  | 0.2 | % |  |  | -0.9 | %
Income tax benefit |  |  | -0.1 | % |  |  | 2.3 | %
The Company accounts for uncertain tax positions in accordance with ASC 740-10-25. ASC 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, 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 fifty percent likely of being realized upon ultimate settlement. To the extent that the final tax outcome of these matters is different than the amount recorded, such differences impact income tax expense in the period in which such determination is made. Interest and penalties, if any, related to accrued liabilities for potential tax assessments are included in income tax expense. ASC 740-10-25 also requires management to evaluate tax positions taken by the Company and recognize a liability if the Company has taken uncertain tax positions that more likely than not would not be sustained upon examination by applicable taxing authorities. Management of the Company has evaluated tax positions taken by the Company and has concluded that as of December 31, 2023 and 2022, there are no uncertain tax positions taken, or expected to be taken, that would require recognition of a liability that would require disclosure in the financial statements. In general, the Company’s statute of limitations remains open for various taxable years, in various U.S. federal, U.S. state and foreign jurisdictions. However, if and when the Company claims net operating loss carryforwards against future taxable income, those losses may be examined by taxing authorities. The Company will perform an analysis to determine the effect, if any, of these loss limitations rules on the NOL carryforward balances. Earnings in all foreign jurisdictions are permanently reinvested.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration