Note 14 - Income Taxes

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Income Tax Disclosure [Text Block]

14. INCOME TAXES

(Loss) income before income taxes consisted of the following:

(In thousands)	For the Years Ended December 31,
	2022			2021
Continuing operations	$	(277,089	)	$	(60,351	)
Discontinued operations		(2,317	)		(12,705	)
Loss before income taxes	$	(279,406	)	$	(73,056	)

Loss from continuing operations before taxes consisted of the following:    

(In thousands)	For the Years Ended December 31,
	2022			2021
U.S. operations	$	(277,904	)	$	(60,351	)
Foreign operations		815			—
Loss before income taxes	$	(277,089	)	$	(60,351	)

 

The income tax (benefit) expense allocation for the years ended  December 31, 2022 and 2021 consisted of the following:

(In thousands)	For the Years Ended December 31,
	2022		2021
Continuing operations	$	846	$	(10,508	)
Discontinued operations		—		(1,334	)
Total income tax expense (benefit)	$	846	$	(11,842	)

The income tax (benefit) expense from continuing operations consisted of the following:

(In thousands)	For the Years Ended December 31,
	2022			2021
Current:
Federal	$	—		$	—
State and local		129			370
Foreign		1,063			—
Total current provision		1,192			370
Deferred:
Federal		(260	)		(8,714	)
State and local		—			(2,164	)
Foreign		(86	)		—
Total deferred (benefit)		(346	)		(10,878	)
Total income tax expense (benefit)	$	846		$	(10,508	)

The following table provides a reconciliation of the federal statutory tax at 21% to the recorded tax expense (benefit) from continuing operations for the years ended December 31, 2022 and 2021, respectively:

(In thousands)	For the Years Ended December 31,
	2022			2021
Computed federal income taxes at the statutory rate (benefit)	$	(58,189	)	$	(12,674	)
State taxes		(3,764	)		292
Permanent tax differences		1,662			2,140
Foreign tax rates and tax credits differing from USA		73			—
Federal true-ups and carryovers		1,106			—
Expired NOL's		—			541
Change in valuation allowance		59,958			(807	)
Total income tax (benefit)	$	846		$	(10,508	)
Effective tax rate		(0.31	)%		17.41	%

The Company accounts for income taxes under the asset-liability method. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Valuation allowances are provided when it is “more likely than not” that the benefits of existing deferred tax assets will not be realized in a future period. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2022 and 2021, respectively, are as follows:

(In thousands)	As of December 31,
	2022			2021
Deferred tax assets:
Net operating loss carryforwards	$	43,885		$	23,941
Property and equipment		257		$	—
Intangible assets		19,113			—
163(j) interest expense limitation		11,139			—
Inventory and accounts receivable reserves		952			1,826
Operating lease obligations		7,175			8,058
Debt related		1,627			—
Accrued liabilities		2,530			786
Other		11			4,371
Valuation allowance		(77,944	)		(20,129	)
Deferred tax assets after valuation allowance		8,745			18,853
Deferred tax liabilities:
Intangible assets		—			(9,426	)
Property, plant and equipment		—			(9,588	)
ROU assets		(5,825	)		—
Accounting method change		(2,742	)		—
Total deferred tax liabilities		(8,567	)		(19,014	)
Net deferred tax asset (liability)	$	178		$	(161	)

The Company adopted the provisions of ASU 2015-17 in 2015. ASU 2015-17 requires that all deferred tax assets and liabilities be classified as noncurrent on the balance sheet. The net deferred tax asset as of  December 31, 2022 is recorded within other assets. 

ASC 740 requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is "more likely than not." Realization of the future tax benefits is dependent on the Company's ability to generate sufficient taxable income within the carryforward period. Because of the Company's recent history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a valuation allowance. The valuation allowance increased by $57.8 million during 2022 and $0.3 million during 2021.

Net operating loss carryforwards as of the financial statement date are as follows:

(in thousands)
	Amount		Expiration Years
Net operating losses, federal (post- December 31, 2017)	$	158,811	Do Not Expire
Net operating losses, federal (pre-January 1, 2018)		34,110		2027-2038
Net operating losses, state		957		2033-2038

The Company files consolidated income tax returns for federal and many state jurisdictions in addition to separate subsidiary income tax returns in Australia, Canada, India, Belgium and the United Kingdom. As of December 31, 2022, the Company is not under examination by any income tax jurisdiction. The Company is no longer subject to examination in the USA for years prior to 2019.