v3.23.4
Income Taxes
 9 Months Ended 12 Months Ended
Sep. 30, 2023
Dec. 31, 2022
Income Taxes [Line Items]    
Income Taxes

9.      Income Taxes

The Company applies an estimated annual effective tax rate (“ETR”) approach for calculating tax provision for interim periods, as required under GAAP. The Company recorded an income tax expense of $1.0 million and $0.5 million for the three months ended September 30, 2023 and 2022, respectively, and $1.5 million and $1.9 million for the nine months ended September 30, 2023 and 2022, respectively from continuing operations.

The Company’s ETR of (35.46%) for nine months ended September 30, 2023 differed from the expected U.S. statutory tax rate of 21.0% and was primarily impacted by permanent tax adjustments, foreign tax rates that differ from the U.S. federal statutory rate, and valuation allowances on a portion of the Company’s foreign deferred tax assets that are not more likely than not to be realized.

For the nine months ended September 30, 2022, the Company’s ETR of (39.2%) differed from the expected U.S. statutory tax rate of 21.0%, and was primarily impacted by permanent tax adjustments, foreign tax rates that differ from the U.S. federal statutory rate, and valuation allowances on a portion of the Company’s foreign deferred tax assets that are not more likely than not to be realized.

On August 16, 2022, the Inflation Reduction Act (the IRA) was signed into law in the U.S. Among other changes, the IRA introduced a corporate minimum tax on certain corporations with average adjusted financial statement income over a three-tax year period in excess of $1.0 billion and an excise tax on certain stock repurchases by certain covered corporations for taxable years beginning after December 31, 2022 and several tax incentives to promote clean energy. Based on our current analysis and pending future guidance to be issued by Treasury, we do not believe these provisions will have a material impact on our condensed combined and consolidated financial statements.

As of September 30, 2023, there were no material changes to either the nature or the amounts of the uncertain tax positions previously determined for the year ended December 31, 2022.

11. Income Taxes

The income tax provision consists of the following:

 

Years ended December 31,

(In thousands)

  

2022

  

2021

  

2020

Current income taxes

  

 

    

 

    

 

  

Federal

  

$

—

  

$

—

  

$

—

State

  

 

—

  

 

—

  

 

—

Foreign

  

 

1,653

  

 

886

  

 

776

Total Current

  

$

1,653

  

$

886

  

$

776
   

 

    

 

    

 

  

Deferred income taxes

  

 

    

 

    

 

  

Federal

  

$

—

  

$

—

  

$

—

State

  

 

—

  

 

—

  

 

—

Foreign

  

 

909

  

 

2,034

  

 

3,726

Total Deferred

  

$

909

  

$

2,034

  

$

3,726

Total income tax provision

  

$

2,562

  

$

2,920

  

$

4,502

The following represents the domestic and foreign components of loss before income tax provision:

 

Years ended December 31,

(In thousands)

  

2022

  

2021

  

2020

U.S.

  

$

—

 

  

$

—

 

  

$

—

 

Foreign

  

 

(5,367

)

  

 

(9,808

)

  

 

(23,875

)

Total

  

$

(5,367

)

  

$

(9,808

)

  

$

(23,875

)

At December 31, 2022, gross deferred tax assets totaled approximately $27.6 million while gross deferred tax liabilities totaled approximately $1.1 million. Deferred income taxes reflect the net of temporary differences between the carrying amount of assets and liabilities for financial reporting and income tax purposes. The company has gross foreign NOLs of $75.5 million. Applying jurisdictional tax rates, the total tax-effected foreign NOLs are $19.7 million. The amount of NOLs expiring beginning in 2023 is $9.0 million gross or $1.2 million tax-effected. The remaining foreign NOLs do not expire.

Significant components of our deferred taxes assets (liabilities) are as follows:

 

Years ended December 31,

(In thousands)

  

2022

  

2021

Deferred income tax assets:

  

 

  

 

  

 

  

 

Property, plant, and equipment

  

$

228

 

  

$

481

 

Defined benefit liability

  

 

4,214

 

  

 

5,684

 

Bad debt reserve

  

 

163

 

  

 

237

 

Inventories

  

 

160

 

  

 

136

 

Accrued liabilities

  

 

2,125

 

  

 

4,820

 

Accrued pension liabilities

  

 

699

 

  

 

845

 

Operating lease liabilities

  

 

258

 

  

 

992

 

Net operating loss

  

 

19,711

 

  

 

18,897

 

Total deferred income tax assets

  

$

27,558

 

  

$

32,092

 
   

 

  

 

  

 

  

 

Deferred income tax liabilities:

  

 

  

 

  

 

  

 

Stock-based compensation

  

$

—

 

  

$

(41

)

Operating lease right of use assets

  

 

(280

)

  

 

(986

)

Intangible assets

  

 

(777

)

  

 

(890

)

Total deferred income tax liabilities

  

$

(1,057

)

  

$

(1,917

)
   

 

  

 

  

 

  

 

Valuation allowance

  

 

(19,446

)

  

 

(20,621

)

Total net deferred income tax assets

  

$

7,055

 

  

$

9,554

 

A reconciliation of the significant differences between the federal statutory income tax and the effective income tax on pretax loss is as follows:

 

Years ended December 31,

(In thousands)

  

2022

  

2021

  

2020

Tax expense at statutory rate

  

$

(1,128

)

  

$

(2,112

)

  

$

(5,041

)

Foreign rate difference

  

 

428

 

  

 

(107

)

  

 

(280

)

Foreign tax expense

  

 

—

 

  

 

—

 

  

 

61

 

Return to provision adjustments

  

 

399

 

  

 

—

 

  

 

—

 

Rate change

  

 

(561

)

  

 

—

 

  

 

—

 

Change in valuation allowance

  

 

2,296

 

  

 

4,153

 

  

 

11,243

 

Currency translation adjustment

  

 

—

 

  

 

—

 

  

 

—

 

Permanent differences

  

 

1,129

 

  

 

986

 

  

 

(1,220

)

Tax credit

  

 

—

 

  

 

—

 

  

 

—

 

Trade tax

  

 

—

 

  

 

—

 

  

 

2

 

Other

  

 

—

 

  

 

—

 

  

 

(263

)

Income tax expense

  

$

2,562

 

  

$

2,920

 

  

$

4,502

 

The Company believes that based upon the range of data reviewed, no uncertain tax positions have been identified for the years ended December 31, 2022, 2021 and 2020.
CF ACQUISITION CORP VIII [Member]    
Income Taxes [Line Items]    
Income Taxes  

Note 8 — Income Taxes

The Company’s taxable income primarily consists of interest income from investments held in the Trust Account. The Company’s general and administrative expenses are generally considered start-up costs and are currently not deductible. There was approximately $111,000 of federal income tax expense for the year ended December 31, 2022 and no income tax expense for the year ended December 31, 2021.

The income tax provision for the years ended December 31, 2022 and 2021 consists of the following:

 

For the
Year Ended
December 31,
2022

  

For the
Year Ended
December 31,
2021

Current

  

 

  

 

  

 

  

 

Federal

  

$

111,023

 

  

$

—

 

State

  

 

—

 

  

 

—

 

Deferred

  

 

  

 

  

 

  

 

Federal

  

 

(411,243

)

  

 

(571,138

)

State

  

 

—

 

  

 

—

 

Change in valuation allowance

  

 

411,243

 

  

 

571,138

 

Income tax provision

  

$

111,023

 

  

$

—

 

The Company’s net deferred tax assets as of December 31, 2022 and 2021 are as follows:

 

As of December 31,
   

2022

  

2021

Deferred tax assets

  

 

  

 

  

 

  

 

Start-up/organizational costs

  

$

935,979

 

  

$

501,658

 

Deferred compensation

  

 

41,153

 

  

 

30,777

 

Accrued bonus

  

 

5,250

 

  

 

—

 

Net operating loss carryforwards

  

 

—

 

  

 

38,703

 

Total deferred tax assets

  

 

982,382

 

  

 

571,138

 

Valuation allowance

  

 

(982,382

)

  

 

(571,138

)

Deferred tax assets, net of allowance

  

$

—

 

  

$

—

 

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax assets, projected future taxable income and tax planning strategies in making this assessment. After consideration of all information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance.

There were no unrecognized tax benefits as of both December 31, 2022 and 2021. No amounts were accrued for the payment of interest and penalties as of both December 31, 2022 and 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows for the years ended December 31, 2022 and 2021:

 

For the
Year Ended
December 31,
2022

  

For the
Year Ended
December 31,
2021

Statutory federal income tax rate

  

21.0

%

  

21.0

%

Change in fair value of warrant liability

  

(42.9

)%

  

37.1

%

Change in fair value of FPS liability

  

4.2

%

  

(24.7

)%

Change in valuation allowance

  

16.3

%

  

(33.4

)%

Nondeductible interest expense

  

5.8

%

  

—

%

Effective Tax Rate

  

4.4

%

  

—

%

The Company’s effective tax rate differs from the federal statutory rate mainly due to the changes in fair value of warrant and FPS liabilities, which are not taxable and not deductible, and start-up costs, which are currently not deductible as they are deferred for tax purposes.