TELOS CORP

For the period ended Dec 31, 2023. Filed Mar 15, 2024.

About this filing

A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.

FY2023 · Filed Mar 15, 2024

TLS$7.67+7.0%Stored close · as of Nov 10, 2026

Extracted filing text, with the paragraph anchors used by the comparison.

See the whole filing, with its images and exhibits

Contents

. Income Taxes

INCOME TAXES

Table 15.1: Components of Provision for/(Benefit from) Income Taxes
	For the Year Ended December 31,
	2023	2022
(in thousands)
Current provision
Federal	$—	$—
State	(19)	19
Total current	(19)	19
Deferred tax expense
Federal	32	37
State	23	(2)
Total deferred	55	35
Provision for income taxes	$36	$54

Table 15.2: Reconciliation of Statutory Tax Rate to Actual Tax Rate
	For the Year Ended December 31,
	2023	2022
Computed expected income tax provision	21.0%	21.0%
State income taxes, net of federal income tax benefit	3.6	3.6
Change in valuation allowance for deferred tax assets	7.5	(3.7)
Cumulative deferred adjustments	—	(0.9)
Provision to return adjustments	(0.1)	0.1
Other permanent differences	(0.2)	(0.1)
Stock-based compensation	(41.2)	(20.6)
Section 162(m) limitation - covered employees	9.5	(2.0)
Uncertain tax positions	0.5	(0.5)
R&D credit	(0.7)	3.0
Effective tax rate	(0.1%)	(0.1%)

Table 15.3: Components of Deferred Tax Assets and Liabilities
	As of December 31,
	2023	2022
(in thousands)
Deferred tax assets:
Accounts receivable, principally due to allowance for doubtful accounts	$70	$33
Allowance for inventory obsolescence and amortization	203	210
Accrued liabilities not currently deductible	1,133	1,151
Stock-based compensation	1,352	7,943
Accrued compensation	2,457	915
Lease liabilities	2,906	3,349
Goodwill	30,947	34,009
Capitalized research and development costs	2,992	362
Net operating loss carryforwards - federal	8,402	6,034
Net operating loss carryforwards - state	1,522	1,155
R&D tax credit	3,647	3,760
Amortization and depreciation	252	—
Total gross deferred tax assets	55,883	58,921
Less valuation allowance	(54,999)	(57,559)
Total deferred tax assets, net of valuation allowance	884	1,362
Deferred tax liabilities:
Right-of-use assets	(1,697)	(2,034)
Amortization and depreciation	—	(86)
Total deferred tax liabilities	(1,697)	(2,120)
Net deferred tax liabilities	$(813)	$(758)

Table 15.4: Valuation Allowance Activity
	For the Year Ended December 31,
	2023	2022
(in thousands)
Balance at beginning of year	$57,559	$55,588
(Reductions)/additions	(2,560)	1,971
Balance at end of year	$54,999	$57,559

We establish a valuation allowance for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of deferred tax assets is dependent upon the generation of future taxable income. We considered projected future taxable income, tax planning strategies, and reversal of taxable temporary differences in making this assessment. Based on available evidence, we have determined that a full valuation allowance is required as of December 31, 2023 and 2022. As a result of a full valuation allowance against our deferred tax assets and liabilities, a deferred tax liability related to indefinite-lived goodwill remains on our consolidated balance sheets on December 31, 2023 and 2022.

On December 31, 2023, for federal income tax purposes, there was approximately a $40.0 million net operating loss available to be carried forward to offset future taxable income. Approximately $10.6 million of these net operating loss carryforwards expire in 2037, the remaining will be carried forward indefinitely. As of December 31, 2023, there was approximately $4.9 million of R&D credit carryover which begins to expire in 2033. Certain tax attributes of the Company, including net operating losses and credits, would be subject to a limitation should an ownership change as defined under Section 382 of the Internal Revenue Code of 1986, as amended, occur. The limitations resulting from a change in ownership could affect the Company's ability to utilize its tax attributes. A study was completed in 2020 which confirmed that no limitation applies to the Company's tax attributes as of December 31, 2020. We believe that ownership activity since December 31, 2020 would not result in limitation sufficient to result in the expiration of unused attributes.

Under the provisions of ASC 740, we determined that there were approximately $1.2 million and $1.4 million of unrecognized tax benefits as of December 31, 2023 and 2022, respectively. Included in the balance of unrecognized tax benefits as of December 31, 2023 and 2022 were $0.01 million and $0.10 million, respectively, of tax benefits that, if recognized, would impact the effective tax rate. Also included in the balance of unrecognized tax benefits as of December 31, 2023 and 2022 were $1.2 million and $1.3 million, respectively, of tax benefits that, if recognized, would not impact the effective tax rate due to the Company's valuation allowance. We report interest and penalties as a component of income tax expense. The Company had accrued interest and penalties related to the unrecognized tax benefits of $0.01 million and $0.10 million, which were recorded in other liabilities as of December 31, 2023 and 2022, respectively.

We believe that the total amounts of unrecognized tax benefits will not significantly increase or decrease within the next 12 months. The period for which tax years are open, 2013 to 2023, has not been extended beyond the applicable statute of limitations. As of December 31, 2023, the Company is not under examination by any federal tax jurisdiction, but is currently under examination by a state tax jurisdiction.

Table 15.5: Reconciliation of the Beginning and Ending Amounts of Unrecognized Tax Benefit
	For the Year Ended December 31,
	2023	2022
(in thousands)
Balance at beginning of year	$1,357	$1,056
Decrease in prior year tax positions	(169)	(5)
Increase related to current year tax positions	131	377
Decrease related to lapse of statutes	(91)	(71)
Balance at end of year	$1,228	$1,357

ContentsView on SEC.gov

The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.