Income Taxes

12 Months Ended

Dec. 31, 2023

Income Taxes

Income Taxes

11.         Income Taxes

The Company’s components of loss before income tax, exclusive of Breckenridge were as follows (in thousands):

	Year Ended December 31,
	2023		2022
Domestic	$	(9,177)	$	(20,566)
Foreign		(2,090)		222
Loss before income tax	$	(11,267)	$	(20,344)

The Company’s components of income tax benefit (expense) were as follows (in thousands):

	Year Ended December 31,
	2023		2022
Current federal benefit	$	17	$	9
Current state expense		(42)		—
Deferred federal benefit (expense)		114		(109)
Deferred state benefit (expense)		7		(7)
Income tax benefit (expense)	$	96	$	(107)

The income tax provision differs from the amount computed by applying the statutory federal income tax rate to loss before income tax as follows (in thousands):

	Year Ended December 31,
	2023		2022
Tax benefit computed at statutory rate of 21%	$	2,366	$	4,272
Change in valuation allowance		(2,599)		15,352
State income tax expense, net of federal tax		(28)		(5)
Foreign losses		492		70
Section 382 limited NOL		—		(19,904)
Other		(135)		108
Income tax benefit (expense)	$	96	$	(107)

The principal components of the Company’s net deferred tax assets (liabilities) (in thousands) were as follows:

	December 31,
	2023		2022
Deferred tax assets:
Federal tax net operating loss ("NOL") carryforward	$	14,505	$	13,373
Foreign tax NOL carryforward		7,031		6,423
Deferred revenue		1,697		379
State tax NOL carryforward		1,579		1,398
Intangible Assets - Breckenridge		939		—
Accrued severance		456		—
Other comprehensive income		421		458
Foreign deferred taxes		256		252
Right-of-use assets		79		80
Canadian start-up costs		58		74
Other		53		52
Self-insurance		39		37
Workers’ compensation		3		8
Gross deferred tax assets		27,116		22,534
Less valuation allowances		(26,443)		(21,184)
Net deferred tax assets		673		1,350
Deferred tax liabilities:
Property and equipment		(688)		(1,486)
Net deferred tax liabilities	$	(15)	$	(136)
Domestic deferred tax liabilities	$	(15)	$	(136)
Foreign deferred tax liabilities		—		—
Net deferred tax liabilities	$	(15)	$	(136)

At December 31, 2023, the Company had a gross NOL for U.S. federal income tax purposes of approximately $163,849,000 but expects approximately $94,779,000 to expire unused due to the 382 event discussed below. The remaining NOL will begin to expire in 2027. Losses incurred after the year ended December 31, 2017 have no expiration. The Company will carry forward the tax benefits related to federal net NOL of approximately $14,505,000. The Company also had state net NOLs that will affect state taxes of approximately $1,579,000 at December 31, 2023. State NOLs began to expire in 2015 and continue to expire each year. The Company also had a Canadian gross NOL of $27,043,000 that will begin to expire in 2037.

On January 14, 2022, the Company was subject to an Internal Revenue Code section 382 event that limited some of our NOL utilization in future periods. The 382 limitation rendered a substantial portion of the NOLs unusable and caused the Company to write off approximately $19,904,000 of the federal net NOLs against the valuation allowance. It also caused the Company to adjust the valuation allowance so we are still in a naked credit position domestically, but it did not have a material impact on tax expense.

In evaluating the possible sources of taxable income during 2023, the Company determined it is more likely than not that the remaining deferred tax assets will not be realizable. As a result, the Company recorded full valuation allowance against foreign deferred tax assets and its federal and state deferred tax assets with the exception of its trademark intangible.

At December 31, 2023 and 2022, the Company did not have any uncertain tax positions. The Company’s policy is to recognize interest and penalties related to an uncertain tax position in income tax expense.