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INCOME TAXES | 12 Months Ended
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Aug. 31, 2023
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES We utilize ASC 740 to account for income taxes which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities. The components of the income tax provision for the years ended August 31, 2023, 2022, and 2021 were as follows:
(in thousands) |  | 2023 |  | 2022 |  | 2021
Current |  |  |  |  |  |
Federal |  | $ | 2,990 |  |  | $ | 2,518 |  |  | $ | 1,315 |
State |  | 696 |  |  | 611 |  |  | 450 |
Foreign |  | 144 |  |  | (228) |  |  | 166 |
Total current tax expense |  | 3,830 |  |  | 2,901 |  |  | 1,931 |
Deferred |  |  |  |  |  |
Federal |  | (1,818) |  |  | (4) |  |  | (379) |
State |  | (278) |  |  | (265) |  |  | (249) |
Total deferred federal and state |  | (2,096) |  |  | (269) |  |  | (628) |
Total |  | $ | 1,734 |  |  | $ | 2,632 |  |  | $ | 1,303 |
A reconciliation of the expected income tax computed using the federal statutory income tax rate to the Company's effective income tax rate is as follows for the years ended August 31, 2023, 2022, and 2021:
| 2023 |  | 2022 |  | 2021
Income tax computed at federal statutory tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State taxes, net of federal benefit | 4.7 |  |  | 3.2 |  |  | 2.0 |
Meals & entertainment | 0.1 |  |  | — |  |  | — |
Stock-based compensation | 2.1 |  |  | 0.6 |  |  | (6.8) |
Other permanent differences | 3.3 |  |  | 0.4 |  |  | (0.3) |
Research and development credit | (2.2) |  |  | (2.2) |  |  | (1.6) |
Foreign-tax-related differences | (8.2) |  |  | (3.2) |  |  | (2.6) |
Research & credit adjustments to expense | — |  |  | — |  |  | 0.2 |
Change in prior year estimated taxes | (6.0) |  |  | (2.4) |  |  | (0.1) |
Total | 14.8 | % |  | 17.4 | % |  | 11.8 | %
Significant components of the Company's deferred tax assets and liabilities for income taxes for the years ended August 31, 2023, and 2022 are as follows:
(in thousands) |  | 2023 |  | 2022
Deferred tax assets: |  |  |  |
Accrued compensation |  | $ | 865 |  |  | $ | 563 |
Deferred revenue |  | 103 |  |  | 241 |
Capitalized merger costs |  | 696 |  |  | 703 |
Operating lease liability |  | 285 |  |  | — |
Intellectual property |  | — |  |  | 7 |
Research and development credits |  | 274 |  |  | 347 |
Foreign tax credits |  | — |  |  | 101 |
State taxes |  | (19) |  |  | 128 |
Allowance for doubtful accounts |  | 11 |  |  | 3 |
State tax deferred |  | — |  |  | 28 |
Capitalized Research & Development |  | 1,079 |  |  | — |
Share-Based Compensation |  | 1,104 |  |  | — |
Net Operating Loss Carryforward |  | 2,142 |  |  | — |
Total deferred tax assets |  | 6,540 |  |  | 2,121 |
Less: Valuation allowance |  | — |  |  | — |
Deferred tax asset |  | 6,540 |  |  | 2,121 |
Deferred tax liabilities: |  |  |  |
Property and equipment |  | (90) |  |  | (109) |
Operating lease right-of-use assets |  | (295) |  |  | — |
Unrealized Gain/(Loss) |  | (122) |  |  | — |
State tax deferred |  | — |  |  | (30) |
Intellectual property |  | (2,353) |  |  | (1,139) |
Capitalized computer software development costs |  | (2,242) |  |  | (2,299) |
Total deferred tax liabilities |  | (5,102) |  |  | (3,577) |
Net deferred tax assets (liabilities) |  | $ | 1,438 |  |  | $ | (1,456) |
We follow ASC 740 with regard to our accounting for uncertainty in income taxes recognized in the financial statements. Such guidance prescribes a recognition threshold of more likely than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, we determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position and assume that the tax position will be examined by taxing authorities. Interest and penalties were immaterial for the years ended August 31, 2023, 2022, and 2021, respectively. We file income tax returns with the IRS and various state jurisdictions as well as with the countries of India, Belgium and France. Our federal income tax returns for fiscal year 2019 through 2022 are open for audit, and our state tax returns for fiscal year 2018 through 2022 remain open for audit. Net Operating Loss is summarized as follows:
(in thousands) |  | Amount
Federal NOL as of August 31, 2023 |  | $ | 17,775 |
Subject to expiration |  | 14,440 |
Carried forward indefinitely |  | 3,335 |
Amount to expire before Section 382 limitation lifts |  | 9,333 |
Pennsylvania NOL as of August 31, 2023 |  | 16,054 |
Subject to expiration |  | 16,054 |
Carried forward indefinitely |  | — |
Amount to expire before Section 382 limitation lifts |  | 10,935 |
Our review of prior-year tax positions using the criteria and provisions presented in guidance issued by FASB did not result in a material impact on our financial position or results of operations.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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