Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.24.1
Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The provision for income taxes consists of the following (amount in thousands):
December 31,
2023 2022
Current provision:
Federal $ —  $ — 
State 63  22 
Total current 63  22 
Deferred expense (benefit):
Federal 135  40 
State (50) (116)
Total deferred 85  (76)
Income tax expense (benefit) $ 148  $ (54)
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,
2023 2022
Provision for federal income taxes at statutory rates $(5,006) 21  % $(5,822) 21  %
Provision for state income taxes, net of federal benefit (388) 2  % (505) 2  %
Change in valuation allowance 4,785 (20) % 6,274 (23) %
Nondeductible expenses 10 —  % 6 —  %
Return to provision adjustments 737 (3) % — —  %
Other 10 —  % (7) —  %
Income tax expense (benefit) $148 —  % $(54) —  %
Effective Tax Rate 0.6% 0.2%  
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,
2023 2022
Deferred tax assets
Net operating loss carryforward $ 11,376  $ 9,383 
Property and equipment 112  — 
Reserves 134  94 
Share based compensation 3,963  2,270 
Interest expense carryforward 60  18 
Research and development credits 35  35 
Lease liability 1,228  1,566 
Basis in partnership 2  2 
Charitable contributions carryover 36  28 
Total deferred tax assets 16,946  13,396 
Deferred tax liabilities    
Property and equipment —  (54)
Intangibles (2,693) (3,247)
Internally developed software (499) (692)
Unrealized gain/loss —  (29)
Right-of-Use assets (956) (1,259)
Prepaid expenses (269) (287)
Total deferred tax liabilities (4,417) (5,568)
Valuation allowance (12,911) (8,125)
Deferred tax liability, net $ (382) $ (297)
As of December 31, 2023, and December 31, 2022, the Company had federal net operating loss carryforwards of approximately $49.4 million and $40.8 million and state net operating loss carryforwards of approximately $26.0 million and $20.8 million, respectively. Federal net operating losses in the amount of $48.4 million carryforward indefinitely; the remainder are subject to expiration beginning in 2035. State net operating 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, 2023 and 2022. Due to the Company's carryforward of net operating losses the statute of limitations remains open subsequent to and including the year ended December 31, 2015.