Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

14. Income Taxes

Our provision for income taxes is comprised of the following:

	For the Years Ended December 31,
(in thousands)	2023		2022
Current:
Federal	$	—	$	—
State		7		—
Total current		7		—
Deferred:
Federal		49		189
State		4		13
Total deferred		53		202
Provision for income taxes	$	60	$	202

The provision for income taxes differs from the tax expense that would result by applying the statutory federal income tax rate to loss before taxes is due to the following:

	For the Years Ended December 31,
(in thousands)	2023			2022
Expected federal income tax benefit at statutory rate   of 21% in 2023 and 2022	$	(1,163	)	$	(533	)
Effect of permanent other differences		(359	)		79
Goodwill		—			—
Return to provision adjustments		(123	)		220
State income tax expense (benefit), net of federal benefit tax assets		(6	)		(38	)
Valuation allowance		1,711			474
Provision for income taxes	$	60		$	202

Deferred income taxes reflect net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the net deferred income tax assets (liabilities) are as follows:

	As of December 31,
(in thousands)	2023			2022
Deferred tax assets (liabilities):
Stock-based compensation	$	1,246		$	1,085
Depreciation and amortization		(3,231	)		(3,635	)
Legal accrual		172			653
Net operating loss carryforward		17,852			17,159
Charitable carryforward					3
Right of use lease asset		(1,415	)		(1,596	)
Long-term lease		1,284			1,460
Equity method investment		816			—
Other		251			187
Tax credits		300			300
Valuation allowance		(17,826	)		(16,115	)
Total deferred tax liabilities, net of valuation allowance	$	(551	)	$	(499	)

The source of income before income taxes are as follows:

(in thousands)	2023			2022 (As restated)
Domestic	$	(5,535	)	$	(3,033	)

Periodically, we perform assessments of the realization of our net deferred tax assets considering all available evidence, both positive and negative. We determined that a valuation allowance against our deferred tax assets of $17.8 million and $16.1 million for 2023 and 2022, respectively, was necessary due to the cumulative loss incurred

over a three-year period. We have federal and state net operating loss carryforwards of approximately $79.3 million and $25.7 million, respectively, of which $10.4 million in federal net operating losses expire after 2037. Net operating losses generated in 2018 and beyond do not expire. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is a stimulus bill which was in response to economic consequences of the COVID-19 pandemic. The CARES Act provided an employee retention credit, which is a refundable tax credit against certain employment taxes. During the second half of 2023, we recorded $1.75 million related to the employee retention credit in Selling and operating expenses in the consolidated statements of operations with a related receivable balance from the United States government related to the CARES Act, which is recorded in Prepaid expenses and other current assets on our consolidated balance sheets.

We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. We measure the tax benefits recognized in the consolidated financial statements from such a position based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous. As such, we are required to make many subjective assumptions and judgments regarding our income tax exposures. Interpretations of and guidance surrounding income tax law and regulations change over time and may result in changes to our subjective assumptions and judgments which can materially affect amounts recognized in our consolidated balance sheets and consolidated statements of operations.

The result of our assessment of our uncertain tax positions did not have a material impact on our consolidated financial statements. Our federal and state tax returns for all years after 2015 are subject to future examination by tax authorities for all our tax jurisdictions. We recognize interest and penalties related to income tax matters in interest and other income (expense) and corporate, general and administrative expenses, respectively.