Note 9 – Income Taxes

The following table sets forth the expense or (benefit) for income taxes:

The following table sets forth reconciliations of the income tax expense at the statutory federal income tax rate to actual expense based on our loss before income taxes:

The following table sets forth our deferred income tax assets and liabilities:

During the year ended December 31, 2023, valuation allowances on deferred tax assets that are not anticipated to be realized decreased by $3.6 million which was recorded to deferred expense. During the year ended December 31, 2022, valuation allowances on deferred tax assets that were not anticipated to be realized increased by $7.5 million, substantially all of which was recorded to deferred expense while an insignificant portion was recorded in final purchase accounting.

Our deferred tax valuation allowances are primarily the result of uncertainties regarding the future realization of recorded tax benefits on tax losses. The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available evidence, it is more likely than not that the deferred tax assets will not be realized. We have evaluated the realizability of our deferred tax assets in each jurisdiction by assessing the adequacy of expected taxable income, including the reversal of existing temporary differences, historical and projected operating results, and the availability of prudent and feasible tax planning strategies. Based on this analysis, we have determined that the valuation allowances recorded as of December 31, 2023 and December 31, 2022 are appropriate.

We have deferred tax assets related to U.S. federal tax and state tax carryforwards for net operating losses (“NOL”) in the amount of $59.5 million. The majority of U.S. federal NOL carryforwards are carried forward indefinitely. Federal NOLs generated after 2017 have an indefinite carryforward and are only available to offset 80 percent of taxable income beginning in 2021. U.S. state NOL carryforwards expire at various dates of which the majority begin to expire in 2039. We have deferred tax assets related to foreign NOL carryforwards, which begin to expire in 2034, in the amount of $0.2 million.

We are not currently under examination for any of the major jurisdictions where we conduct business as of December 31, 2023; however, all of our tax years remain subject to examination. Our management does not believe there are significant uncertain tax positions in 2023 and as a result we do not expect any cash payments in the next 12 months. A reserve for potential penalties for $0.1 million that was established in 2021 was reversed in 2022 as a result of the Internal Revenue Service’s dismissal of the matters. There was no interest related to uncertain tax positions in 2023 or 2022.

We did not pay any income taxes during the year ended December 31, 2023 and we paid less than $0.1 million for income taxes, net of refunds received, in certain state and national jurisdictions during the year ended December 31, 2022.