Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v3.22.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES
NOTE H – INCOME TAXES
 
The provisions for income taxes for the years ended December 31, 2021 and 2020 are as follows: 
 
 
 
Year ended

December 31,
2021
 
 
Year ended

December 31,
2020
 
Current:
 
 
 
 
 
 
Federal
 
$
-
 
 
$
(4,778,000
)
State
 
 
-
 
 
 
(2,206,000
)
Foreign
 
 
-
 
 
 
-
 
 
 
 
 -
 
 
 
(6,984,000)
 
Deferred:
 
 
 
 
 
 
 
 
Federal
 
 
(841,000
 )
 
 
2,246,000
 
State
 
 
(280,000
 )
 
 
1,037,000
 
Foreign
 
 
-
 
 
 
-
 
Change in
v
aluation
a
llowance
 
 
-
 
 
 
3,701,000




(1,121,000
)
 

6,984,000
 
 
 
 
 
 
 
 
 
 
Income tax benefit
 
$
(1,121,000
)
 
$
 
-
 

A reconciliation of the federal statutory rate to the effective tax rate is as follows: 
 
 
Year ended
December 31,
2021
 
 
Year ended
December 31,
202
0
 
 
 
 
 
 
 
 
Federal statutory rate
 
 
21
%
 

21
%
State, net of federal tax benefit
 
 
7
%
 
 
7
%
Change in valuation allowance:
 
 
(26
 )%
 
 
(28
)%
Effective tax rate
 

2
%
 

-
 

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.
At December 31, 2021 and 2020 the deferred income tax assets and liabilities consisted of the following temporary differences:

 
 
As
 
of
December 31,
 
2021
 
 
 
As
 
of
D
ece
mber 31,
 
202
0
 
 
Deferred tax assets:
 
 
 
 
 
 
 
 
Net operating losses
 
$
20,103,000
 
 
 
$
15,513,000
 
Share based compensation
 
 
598,000
 
 

361,000
 
Accrued vacation
 
 
111,000
 
 
 
-
 
Accrued payroll
 
 
616,000
 
 
 
1,238,000
 
Accrued interest
 
 
519,000
 
 
 
586,000
 
Lease liabilities
 
 
 
420,000
 
 
 
-
 
Fair value of Warrant Commitment Liability
 
 
898,000
 
 
 
-
 
Fair value - Class B Units
 
 
 
2,268,000
 
 
 
566,000
 
Total deferred assets
 
 
25,533,000
 
 
 
18,264,000
 
Less valuation allowance for deferred tax assets
 
 
(23,651,000
)
 
 
 
(18,264,000
)
 
Net deferred tax asset
 
 
1,882,000
 
 
 
-
 
 
Deferred tax liabilities:
 
 
 
 
 
 
 
 
Property, plant and equipment
 
 
 
(328,000
)
 
 
-
 
Intangibles
 
 
(2,759,000
)
 
 
-
 
Lease assets
 
 
 
(419,000
)
 
 
-
 
Total deferred tax liabilities
 
 
 
(3,506,000
)
 
 
-
 
Net deferred tax liabilit
y
 
$
(1,624,000
)
 
$
-
 
 
At December 31, 2021 and 2020 the Company has federal
and state
net operating loss carryforwards of approximately: 
 
 
December 31,
2021
 
 
December 31,
202
0
 
 
 
 
 
 
 
 
 
Net operating losses
 
$
71,847,000
 
 
$
46,109,000
 
 
Inasmuch as it is possible to determine when or if the net operating losses will be utilized, a valuation allowance has been established to offset the benefit of the utilization of the net operating losses.
 
As of December 31, 2021, the Company had available
federal and state
 
n
e
t operating losses of approximately $71.8 million which 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.  Certain loss carryforwards begin to expire in 2021 and a portion may be used indefinitely.  Should the Company experience a significant change in ownership, the utilization of net operating losses could be reduced.
 
The Company and its subsidiaries file tax returns in the U.S. Federal jurisdiction and various states. 
The Company is no longer subject to U.S. federal tax examinations for tax years before and including December 31, 2017
. 
The Company is no longer subject to examination by state tax authorities for tax years before and including December 31, 2016
.