Income Taxes

12 Months Ended

Dec. 31, 2024

Income Taxes

Income Taxes

Note 13: Income Taxes

The provision for income taxes consisted of the following components for the years ended December 31 (in 000’s):

	2024			2023
Current:
Federal	$	20		$	(79	)
State		5			45
Foreign		12			(55	)
Total Current		37			(89	)
Deferred:
Federal		(3,611	)		(670	)
State		(590	)		(175	)
Foreign		100			(4	)
Total Deferred		(4,101	)		(849	)
Total benefit for income taxes	$	(4,064	)	$	(938	)

Reconciliation between the statutory rate and the effective tax rate is as follows on December 31 (in 000's, except percentages):

	2024						2023
	Amount			Percentage			Amount			Percentage
Federal statutory tax rate	$	(3,642	)		21.0	%	$	(920	)		21.0	%
State tax rate		(586	)		3.3	%		(139	)		3.2	%
Permanent difference – stock-based compensation		56			(0.3	)%		54			(1.2	)%
Permanent difference – other		19			(0.1	)%		8			(0.2	)%
Foreign tax credit generated		—			—			—			—
Tax on foreign earnings – tax reform		40			(0.2	)%		—			—
Foreign rate differential		4			(0.1	)%		(9	)		0.2	%
FDII Deduction		—		—		%		—			—
Other		45			(0.3	)%		68			(1.6	)%
Total	$	(4,064	)		23.4	%	$	(938	)		21.4	%

Components of net deferred income tax assets are as follows on December 31 (in 000's):

	2024			2023			Change
Assets:
Deferred revenue	$	129		$	80		$	49
Allowance for doubtful accounts		350			311			39
Stock options		385			338			47
Transaction costs		61			69			(8	)
IRC Section 174 capitalized costs		936			510			426
ROU lease liability		279			293			(14	)
Purchase of intangible assets		2,144			—			2,144
Other		12			19			(7	)
Total deferred tax asset		4,296			1,620			2,676
Liabilities
Prepaid expenses		(3	)		(1	)		(2	)
Basis difference in fixed assets		(88	)		(149	)		61
Capitalized software		(63	)		(20	)		(43	)
ROU Assets		(251	)		(260	)		9
Purchase of intangibles		—			(1,268	)		1,268
Other		(98	)		(61	)		(37	)
Total deferred tax liability		(503	)		(1,759	)		1,256
Total net deferred tax asset / (liability)	$	3,793		$	(139	)	$	3,932

As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred tax assets. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. It has been determined that is more likely than not that the Company's deferred tax assets are able to be realized based on future positive earnings and reversal of existing temporary differences.

The Company had no unrecognized tax benefits as of December 31, 2024 or December 31, 2023. Interest and, if applicable, penalties are recognized related to unrecognized tax benefits in income tax expense. There are no accruals for interest and penalties on December 31, 2024.

Undistributed earnings of the Company are insignificant as of December 31, 2024. With the enactment of the 2017 Act, the Company does not consider any of its foreign earnings as indefinitely reinvested.

The Company is subject to income taxation by both federal and state taxing authorities. Income tax returns for the years ended December 31, 2023, 2022 and 2021 are open to audit by federal and state taxing authorities.