Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

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INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES
NOTE J - INCOME TAXES
Provision for income taxes consists of U.S. and state income taxes and income taxes in certain foreign jurisdictions in which the Company conducts business. The Company is in an overall deferred tax asset position in the U.S. and maintains its valuation allowance for certain federal and state tax jurisdictions as existing deferred tax liabilities do not provide sufficient future taxable income to realize the full benefit of its deferred tax assets.
The Company files tax returns in the U.S. federal jurisdiction, and in multiple state and foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examinations for years before 2020 and is no longer subject to state, local and foreign income tax examinations by tax authorities for years before 2019. The Company is currently not under audit by any jurisdictions. The Company did not recognize any material interest or penalties related to uncertain tax positions for the years ended December 31, 2023 and December 31, 2022.
The effective tax rate for the years ended December 31, 2023 and December 31, 2022 is (0.4)% and 1.0%, respectively. The primary drivers for the differences in the rates from the prior-year period to the current-year period is the acquisition of an entity in a foreign jurisdiction in the fourth quarter of 2022.
The provisions for income taxes for the years ended December 31, 2023 and December 31, 2022 are as follows:
(in thousands) Year ended December 31,
2023		 Year ended December 31,
2022
Current:
Federal $ —  $ — 
State —  — 
Foreign 118  — 
118  — 
Deferred:
Federal —  — 
State —  — 
Foreign 203  (348)
Change in valuation allowance —  — 
203  (348)
Income tax benefit (loss) $ 321  $ (348)
A reconciliation of the federal statutory rate to the effective tax rate is as follows:
Year ended December 31,
2023		 Year ended December 31,
2022
Federal statutory rate 21  % 21  %
State, net of federal tax benefit 6  % 7  %
Change in valuation allowance (27) % (27) %
Effective tax rate —  % 1  %
Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. Management has assessed the realizability of deferred tax assets and has determined there is sufficient evidence that all of the deferred tax assets may not be realized. As such, the Company has recorded a 100% valuation allowance against the net deferred tax assets of the U.S. consolidated group.
Deferred income tax assets and liabilities consisted of the following temporary differences at December 31, 2023 and December 31, 2022:
(in thousands) As of December 31, 2023 As of December 31, 2022
Deferred tax assets:
Net operating losses $ 70,455  $ 34,885 
Share based compensation 710  727 
Accrued vacation 346  149 
Accrued payroll 1,817  877 
Accrued interest 3,894  447 
Lease liabilities 425  1,027 
Contingent liabilities
 104,253  — 
Other 378  — 
Total deferred assets 182,278  38,112 
Less valuation allowance for deferred tax assets (59,971) (34,905)
Net deferred tax asset 122,307  3,207 
Deferred tax liabilities:
Capitalized research and development costs (17,230) — 
State taxes (2) — 
Property, plant and equipment (104,386) (243)
Intangibles (1,776) (1,901)
Lease assets (377) (1,093)
Fair value of Warrant Commitment Liability —  (274)
Fair value - Class B Units —  (958)
Total deferred tax liabilities (123,771) (4,469)
Net deferred tax liability $ (1,464) $ (1,262)
The Company had available federal net operating losses of $258.0 million as of December 31, 2023, with a portion of these expiring in 2024 and a portion that may be used indefinitely. The Company had state net operating losses of approximately $233.2 million which can be carried forward indefinitely. The Company had foreign net operating losses of $0.0 million.
These net operating losses can be utilized to offset future earnings of the Company. The utilization of the net operating losses is dependent upon the tax laws in effect at the time such losses can be utilized. Should the Company experience a significant change in ownership, the utilization of net operating losses could be reduced.