Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 11 - Income Taxes

The following table presents the provision for income taxes (in thousands):

	Year Ended December 31,
	2021		2020		2019
Current:
Federal	$	—	$	(6)	$	(44)
State	24		14		12
Total current	$	24	$	8	$	(32)
Deferred:
Federal	$	68	$	94	$	138
State	104		102		54
Foreign	(309)		—		—
Total deferred	$	(137)	$	196	$	192
Income tax expense (benefit)	$	(113)	$	204	$	160

The difference between the provision for income taxes and the amount computed by applying the statutory federal income tax rate of 21% to loss before income taxes is as follows (in thousands):

	Year Ended December 31,
	2021		2020		2019
Statutory rate applied to pre-tax loss	$	(12,876)	$	(3,533)	$	(4,755)
Permanent items	141		256		115
Foreign tax provision	(165)		—		—
Stock compensation related expenses	(3,842)		(449)		274
Compensation limitations	682		—		—
Transaction costs	(453)		—		—
Fair value adjustments	2,106		—		—
State taxes	(2,673)		(458)		(290)
Valuation allowance	16,965		4,462		4,816
Other	2		(74)		—
Income tax expense (benefit)	$	(113)	$	204	$	160

The components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

	As of December 31,
	2021		2020
Deferred tax assets:
Compensation and bonuses	$	2,955	$	1,707
Intangible assets	—		2,303
Stock-based compensation	4,225		620
Accrued expenses and other	847		863
Net operating loss carryforwards	32,625		20,242
Unearned revenue	3,499		3,179
Other carryforwards	34		30
Interest expense limitation	2,286		1,652
Lease liabilities	8,868		—
Deferred rent	—		641
Valuation allowance	(41,143)		(24,178)
Deferred tax assets, net of valuation allowance	$	14,196	$	7,059
Deferred tax liabilities:
Deferred implementation costs	$	(2,808)	$	(2,707)
ROU assets	(7,113)		—
Fixed assets	(3,603)		(2,723)
Intangible Assets	(1,319)		—
Goodwill	(3,691)		(2,397)
Deferred tax liabilities	$	(18,534)	$	(7,827)
Total deferred taxes	$	(4,338)	$	(768)

The Company has evaluated the need for a valuation allowance on a jurisdiction by jurisdiction basis. The Company has considered all available evidence, both positive and negative, and based upon the weight of the available evidence, a valuation allowance has been recorded against the net deferred tax assets in the U.S. since the Company cannot be assured that, more likely than not, such amounts will be realized. In addition, utilization of these net operating loss (“NOL”) and tax credit carryforwards is dependent upon achieving profitable results. The change in valuation allowance for deferred taxes was an increase of approximately $17.0 million, $4.5 million and $4.8 million during the years ended December 31, 2021, 2020, and 2019, respectively, primarily due to the increase in net operating loss carryforwards.

At December 31, 2021, the Company has U.S. Federal, state, and foreign net operating loss carry-forwards of approximately $125.4 million, $83.3 million, and $3.0 million, respectively. Of the total US Federal net operating loss carry-forwards, $93.1 million do not expire, and the remaining carryforwards of $32.3 million begin to expire in 2035 if not used prior to that time. The state net operating loss carry-forwards will expire at various dates beginning in 2022 through 2041. The foreign net operating loss carry-forwards will be carried forward indefinitely.

Section 382 of the Internal Revenue Code of 1986, as amended, imposes an annual limitation on the amount of net operating loss carryforwards that may be used to offset federal taxable income and federal tax liabilities when a corporation has undergone significant changes in its ownership. The Company does not believe that an ownership change in connection with the Business Combination would have a material impact to consolidated financial statements and management will continue to monitor the potential impact.

The Company is subject to taxation in the United States and various states and foreign jurisdictions. As of December 31, 2021, the Company’s tax returns for 2018, 2019, and 2020 are subject to examination by tax authorities. With few exceptions, as of December 31, 2021, the Company is no longer subject to examinations by income tax authorities from U.S. federal, state, or other jurisdictions for years before 2018. The Company did not have any significant uncertain tax positions at December 31, 2021 and 2020.