Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of the provision (benefit) for income taxes, in the consolidated statements of operations are as follows (in thousands):

	For the years ended
	December 31, 2024		December 31, 2023
Continuing Operations
Current
Federal	$	—	$	772
State	45		284
	$	45	$	1,056
Deferred
Federal	5,336		(5,459)
State	1,814		(1,615)
	$	7,150	$	(7,074)
Income taxes provision (benefit) from continuing operations	$	7,195	$	(6,018)

A reconciliation of the statutory federal income tax expense (benefit) to the effective tax is as follows (in thousands):

	2024		2023
Statutory Rate - federal	$	(7,382)	$	(4,788)
State taxes, net of federal benefit	(2,373)		(1,133)
Research & development tax credit	—		(350)
Permanent differences and other	521		510
Income taxes from continuing operations before valuation allowance	(9,234)		(5,761)
Change in valuation allowance	16,429		(257)
Income tax expense (benefit)	$	7,195	$	(6,018)
Total	$	7,195	$	(6,018)

The tax effects of the primary “temporary differences” between values recorded for assets and liabilities for financial reporting purposes and values utilized for measurement in accordance with tax laws giving rise to our deferred tax assets are as follows (in thousands):

	For the years ended
	December 31, 2024		December 31, 2023
Net operating loss and capital loss carryforward	$	12,033	$	4,649
Right of use asset	(1,403)		(1,464)
Other	4,944		4,972
Capital lease obligations	1,403		1,464
Depreciation	783		(479)
Amortization	(997)		(1,612)
Tax credit	350		350
Valuation allowance	(17,113)		(567)
Total	—		7,313

The Company recognizes tax assets and liabilities for the future tax consequences related to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for net operating loss carryforwards. Management evaluated the deferred tax assets for recoverability using a consistent approach that considers the relative impact of negative and positive evidence, including historical profitability and projections of future reversals of temporary differences and future taxable income. The Company is required to establish a valuation allowance for deferred tax assets if management determines, based on available evidence at the time the determination is made, that it is not more likely than not that some portion or all of the deferred tax assets will be realized.

As of December 31, 2024, the Company is in a net deferred tax asset position for federal and state jurisdictions. Based on a three-year cumulative income position the Company concluded that the federal and combined state deferred tax assets will not be realized and there is a need for a full valuation allowance at this time. The Company will continue to monitor the need for any valuation allowance changes on a quarterly basis.

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As of December 31, 2024 there is a valuation allowance of $17.1 million compared to $0.6 million as of December 31, 2023. As of December 31, 2024, the Company has state net operating loss ("NOL") carryforwards of $8.6 million, which begin to expire in 2025 and federal NOL carryforwards of $3.4 million as well as an R&D tax credit carryforward of $0.3 million which can be carried forward indefinitely. A portion of the federal NOL is attributable to 2021 Nebula acquisition, and it is Section 382 limited with an annual limitation of $0.3 million.

The Company is subject to federal, state and local income tax audits from time to time that could result in proposed assessments. Currently, the Company is under audit for its December 31, 2022 tax return with the Internal Revenue Service. There are no ongoing state or local income tax audits as of December 31, 2024.

The Company files a consolidated federal income tax return and separate company state returns as well as combined state returns where applicable.