Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.22.0.1
Income Taxes
12 Months Ended
Dec. 31, 2021
Income Taxes  
Income Taxes

Note 17. Income Taxes

The provision for income taxes consists of the following (amount in thousands):

December 31, 

2021

2020

Current provision:

    

  

    

  

Federal

$

$

State

 

92

 

38

Total current

 

92

 

38

Deferred benefit:

 

 

Federal

 

(2,983)

 

(38)

State

 

(356)

 

(8)

Total deferred

 

(3,339)

 

(46)

Income tax benefit

$

3,247

$

8

A reconciliation of the statutory U.S. federal rate to the Company’s effective tax rate consists of the following (amount in thousands):

For the Years Ended December 31, 

    

2021

2020

 

Provision for federal income taxes at statutory rates

    

3,305

    

(21)

%  

284

    

(21)

%

Provision for state income taxes, net of federal benefit

 

200

(1)

%  

(0.2)

 

%

Change in valuation allowance

 

(203)

1

%  

(272)

 

20

%

Nondeductible expenses

 

(55)

%  

(4)

 

%

Return to provision adjustments

 

%  

0.7

 

%

Other

 

%  

(0.6)

 

%

Income tax benefit

 

3,247

21

%  

8

 

1

%

Effective Tax Rate

 

20.6

%  

0.63

%  

  

The tax effects of the temporary differences and carryforwards that give rise to the deferred tax assets consist of the following (amount in thousands):

December 31, 

2021

2020

Deferred tax assets

    

  

    

  

Net operating loss carryforward

$

5,581

$

2,103

Property and equipment

 

 

6

Intangibles

 

 

(39)

Reserves

 

47

 

15

Share based compensation

713

Interest expense carryforward

 

43

 

53

Research and development credits

35

Lease liability

 

1,009

 

101

Basis in partnership

3

Charitable contributions carryover

 

16

 

5

Total deferred tax assets

 

7,447

 

2,244

Deferred tax liabilities

 

 

Property and equipment

(66)

Intangibles

(3,432)

Internally developed software

 

(877)

 

(173)

Share based compensation

(126)

Right-of-Use assets

(991)

(100)

Prepaid expenses

 

(229)

 

(198)

Total deferred tax liabilities

 

(5,595)

 

(596)

Valuation allowance

 

(1,852)

 

(1,648)

Deferred tax asset, net

$

$

As of December 31, 2021, and December 31, 2020, the Company had federal net operating loss carryforwards of approximately $24.3 million and $9.2 million and state net operating loss carryforwards of approximately $12.8 million and $4.5 million, respectively. Losses will begin to expire, if not utilized, in 2032. Utilization of the net operating loss carryforwards may be subject to an annual limitation according to Section 382 of the Internal Revenue Code of 1986 as amended, and similar provisions.

The Company applies the standards on uncertainty in income taxes contained in ASC Topic 740, Accounting for Income Taxes. The adoption of this interpretation did not have any impact on the Company’s consolidated financial statements, as the Company did not have any significant unrecognized tax benefits during the years ended December 31, 2021 and 2020. Currently, the statute of limitations remains open subsequent to and including the year ended December 31, 2018.