Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.23.1
Income Taxes
12 Months Ended
Dec. 31, 2022
Income Taxes  
Income Taxes

Note 17. Income Taxes

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

December 31, 

2022

2021

Current provision:

    

  

    

  

Federal

$

$

State

 

22

 

92

Total current

 

22

 

92

Deferred benefit:

 

 

Federal

 

40

 

(2,983)

State

 

(116)

 

(356)

Total deferred

 

(76)

 

(3,339)

Income tax benefit

$

54

$

3,247

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, 

    

2022

2021

 

Provision for federal income taxes at statutory rates

    

5,822

    

(21)

%  

3,305

    

(21)

%

Provision for state income taxes, net of federal benefit

 

505

(2)

%  

200

 

(1)

%

Change in valuation allowance

 

(6,274)

23

%  

(203)

 

1

%

Nondeductible expenses

 

(6)

%  

(55)

 

%

Return to provision adjustments

 

%  

 

%

Other

 

7

%  

 

%

Income tax benefit

 

54

%  

3,247

 

21

%

Effective Tax Rate

 

0.2

%  

20.6

%  

  

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, 

2022

2021

Deferred tax assets

    

  

    

  

Net operating loss carryforward

$

9,383

$

5,581

Property and equipment

 

 

Intangibles

 

 

Reserves

 

94

 

47

Share based compensation

2,270

713

Interest expense carryforward

 

18

 

43

Research and development credits

35

35

Lease liability

 

1,566

 

1,009

Basis in partnership

2

3

Charitable contributions carryover

 

28

 

16

Total deferred tax assets

 

13,396

 

7,447

Deferred tax liabilities

 

 

Property and equipment

(54)

(66)

Intangibles

(3,247)

(3,432)

Internally developed software

 

(692)

 

(877)

Unrealized gain/loss

(29)

Right-of-Use assets

(1,259)

(991)

Prepaid expenses

 

(287)

 

(229)

Total deferred tax liabilities

 

(5,568)

 

(5,595)

Valuation allowance

 

(8,125)

 

(1,852)

Deferred tax liability, net

$

(297)

$

As of December 31, 2022, and December 31, 2021, the Company had federal net operating loss carryforwards of approximately $40.8 million and $24.3 million and state net operating loss carryforwards of approximately $20.8 million and $12.8 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, 2022 and 2021. Currently, the statute of limitations remains open subsequent to and including the year ended December 31, 2019.