NOTE 17. INCOME TAXES

The Company’s U.S. federal statutory tax rate of 21% and its foreign operations have statutory tax rates of approximately 23% in Austria, 28% in New Zealand, and 30% in Australia.

The difference between the Company’s estimated effective tax rate benefit of 24.4% for the three months ended June 30, 2024, and the U.S. federal statutory tax rate of 21% was primarily due to the impact of stock compensation and research and experimentation expenditures and credits in the second quarter of 2024.

The difference between the Company’s estimated effective tax rate benefit of 18.0% for the six months ended June 30, 2024, and the U.S. federal statutory tax rate of 21% was primarily due to the impact of stock compensation and research and experimentation expenditures and credits in the first half of 2024.

As of December 31, 2023, the Company’s gross deferred tax asset was $39,893. The Company has recorded a valuation allowance of $714, resulting in a net deferred tax asset of $39,179, before deferred tax liabilities of $34,434. The Company has provided a valuation allowance against a portion of the deferred tax assets as of June 30, 2024 and December 31, 2023, because the ultimate realization of those assets did not meet the more-likely-than-not criteria. Part of the Company’s

deferred tax assets consist of net operating loss carryforwards (“NOLs”) for federal tax purposes. If a change in control were to occur, these could be limited under Section 382 of the Internal Revenue Code of 1986 (“Code”), as amended.

In assessing the realizability of deferred income 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 those temporary differences become deductible and net operating loss and credit carryforwards expire. The estimates and judgments associated with the Company’s valuation allowance on deferred tax assets are considered critical due to the amount of deferred tax assets recorded by the Company on its consolidated balance sheet and the judgment required in determining the Company’s future taxable income. The need for a valuation allowance is reassessed at each interim reporting period.

As of June 30, 2024, we had approximately $17,000 in U.S. net deferred tax assets. These deferred tax assets are estimated to reverse into NOL carryforwards that can be used to offset taxable income and reduce income taxes payable in future periods. At this time, we consider it more likely than not that we will have sufficient taxable income in future periods that will allow us to realize these deferred tax assets. However, unless we can generate sufficient taxable income from our future operations, a valuation allowance to reduce our U.S. deferred tax assets may be required, which would materially increase our expenses in the period the allowance is recognized and have a material adverse effect on our results of operations and consolidated financial position.

As of December 31, 2023, the Company had NOLs and research and experimentation credit for U.S. federal income tax purposes of $7,699 and $2,997, respectively. The Company believes its U.S. Federal NOLs will offset a portion of its future U.S. Federal income taxes.

NOLs available to offset taxable income, subject to compliance with Section 382 of the Code, begin to expire based upon the following schedule:

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