Note 10 - Provision for Taxes

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note 10 —    Provision for Taxes

Income before taxes and the provision for taxes consisted of the following:

In Thousands	2024			2023
Income before taxes:	$	17,776		$	12,493
Provision (benefit) for taxes:
Current
Federal	$	3,985		$	3,472
State		627			583
		4,612			4,055
Deferred
Federal		188			(1,230	)
State		(10	)		(161	)
		178			(1,391	)
	$	4,790		$	2,664

The provision for income taxes was computed based on income before taxes. A reconciliation of the provision for income taxes to the amount computed using the statutory rate follows:

In Thousands	2024			2023
Income tax at statutory rate	$	3,733		$	2,623
Increase (decrease) in income tax resulting from
State tax expense, net of federal effect		487			333
Federal true-ups		121			(53	)
Federal tax credits		(158	)		(405	)
Sale of Harvard Sports		582			-
Captive insurance earnings		-			(112	)
Incentive stock options		(8	)		33
Other		33			245
Recorded provision for income taxes	$	4,790		$	2,664

The provision for income taxes was computed based on income before taxes. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and multiple state and foreign jurisdictions. The Company is subject to future examinations by federal, state and other tax authorities for all years after 2020.

The Company has state, net of federal benefit, research tax credit carryforwards of $322 thousand as of December 31, 2024. The state research tax credit carryforwards begin to expire in 2026. A valuation allowance has been established in the amount of $322 thousand as of December 31, 2024 related to the state tax credit carryforwards, leaving an ending deferred, net of federal benefit, in the amount of zero. The increase in the valuation allowance relates to the decrease in the projected tax liability which would be offset by the credit carryforward. The valuation allowance is based on the historical results and estimated future results of the Company, as it is the judgment of management not all of these tax carryforward attributes will be realized before they begin to expire.

At December 31, 2024, the Company had domestic federal income taxes receivable of $254 thousand, domestic state income taxes receivable of $211 thousand, and transition tax payable of $297 thousand recorded. At December 31, 2023, the Company had domestic federal income taxes receivable of $150 thousand, domestic state income taxes payable of $62 thousand, and transition tax payable of $387 thousand recorded.

The tax effects of temporary differences and carryforwards that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2024 and 2023 are as follows:

In Thousands	2024			2023
Assets
Valuation reserves	$	1,350		$	1,088
Stock based compensation		217			295
Federal and state credits		322			840
Lease obligation		288			2,090
Other		4			28
Capitalized research costs		2,714			2,104
Total assets		4,895			6,445
Liabilities
Property and equipment		(864	)		(1,206	)
Goodwill and intangible assets		(6,139	)		(5,732	)
Lease – right of use asset		(277	)		(1,959	)
Prepaid insurance		(595	)		(354	)
Total liabilities		(7,875	)		(9,251	)
Valuation Allowance
Beginning balance		(319	)		(351	)
(Increase) Decrease during period		(3	)		32
Ending balance		(322	)		(319	)
	$	(3,302	)	$	(3,125	)

The following table reconciles the total amounts of unrecognized tax benefits:

In Thousands	2024		2023
Balance at beginning of year	$	-	$	20
Closure of tax years		-		(20	)
Balance at end of year	$	-	$	-

The total amount of unrecognized tax benefits, net of federal income tax benefits, were zero at December 31, 2024 and December 31, 2023.

The Company had no accrued interest and penalties related to taxes, recognized as a liability, as of December 31, 2024.

The Company has assessed its risk associated with all tax return positions and believes its tax reserve estimate reflects its best estimate of the deductions and positions it will be able to sustain, or it may be willing to concede as part of a settlement. At this time, the Company does not anticipate any change in its tax reserves in the next twelve months. The Company will continue to monitor the progress and conclusion of all audits and will adjust its estimated liability as necessary.