Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

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

	December 31,
	2024		2023
Current provision:
Federal	$	—	$	—
State	85		63
Total current	85		63
Deferred expense (benefit):
Federal	(998)		135
State	(109)		(50)
Total deferred	(1,107)		85
Income tax expense (benefit)	$	(1,022)	$	148

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,
	2024				2023
Provision for federal income taxes at statutory rates	$	(4,761)	21	%	$	(5,006)	21	%
Provision for state income taxes, net of federal benefit	(19)		—	%	(388)		2	%
Change in valuation allowance	252		(1)	%	4,785		(20)	%
Nondeductible expenses	350		(2)	%	10		—	%
Stock compensation adjustments	3,287		(14)	%	737		(3)	%
Other	(131)		1	%	10		—	%
Income tax expense (benefit)	$	(1,022)	5	%	$	148	—	%
Effective Tax Rate	4.5%				0.6%

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,
	2024		2023
Deferred tax assets
Net operating loss carryforward	$	12,564	$	11,376
Property and equipment	139		112
Reserves	587		134
Share based compensation	1,229		3,963
Interest expense carryforward	173		60
Research and development credits	35		35
Lease liability	1,095		1,228
Basis in partnership	2		2
Internally developed software	12		—
Charitable contributions carryover	34		36
Total deferred tax assets	15,870		16,946
Deferred tax liabilities
Intangibles	(1,512)		(2,693)
Internally developed software	—		(499)
Right-of-Use assets	(870)		(956)
Prepaid expenses	(374)		(269)
Total deferred tax liabilities	(2,756)		(4,417)
Valuation allowance	(13,162)		(12,911)
Deferred tax liability, net	$	(48)	$	(382)

As of December 31, 2024, and December 31, 2023, the Company had federal net operating loss carryforwards of approximately $54.6 million and $49.4 million and state net operating loss carryforwards of approximately $28.9 million and $26.0 million, respectively. Federal net operating losses in the amount of $53.6 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, 2024 and 2023. 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.