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Income Taxes
 6 Months Ended
Jun. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes
9.
Income Taxes
The components of income (loss) before income taxes, as shown in the accompanying Financial Statements, consisted of the following for the three and six months ended June 30, 2023 and 2022:
 
    
Three Months Ended
June 30,
     
Six Months Ended
June 30,
  
    
2023
     
2022
     
2023
     
2022
  
                             
    
(Amounts in thousands)
     
(Amounts in thousands)
  
Income (loss) before income taxes:
            
Domestic
    $ (5,074 )     $ 3,858      $ (2,994 )     $ 7,173  
Foreign
      2,296        (242 )       695        (310 ) 
  
 
 
     
 
 
     
 
 
     
 
 
  
Income (loss) before income taxes
    $ (2,778 )     $ 3,616      $ (2,299 )     $ 6,863  
  
 
 
     
 
 
     
 
 
     
 
 
  
The Company has foreign subsidiaries which generate revenues from
non-U.S.-based
clients. Additionally, these subsidiaries provide services to the Company’s U.S. operations. Accordingly, the Company allocates a portion of its income (loss) to these subsidiaries based on a “transfer pricing” model and reports such income (loss) as foreign in the above table.
The provision (benefit) for income taxes, as shown in the accompanying Financial Statements, consisted of the following for the three and six months ended June 30, 2023 and 2022:
 
    
Three Months Ended
June 30,
     
Six Months Ended
June 30,
  
    
2023
     
2022
     
2023
     
2022
  
                             
    
(Amounts in thousands)
     
(Amounts in thousands)
  
Current provision (benefit):
            
Federal
    $ (894 )     $ 932      $ (183 )     $ 1,030  
State
      (136 )       234        34        259  
Foreign
      591        (35 )       145        51  
  
 
 
     
 
 
     
 
 
     
 
 
  
Total current provision (benefit)
      (439 )       1,131        (4 )       1,340  
  
 
 
     
 
 
     
 
 
     
 
 
  
Deferred provision (benefit):
            
Federal
      (154 )       (58 )       (402 )       484  
State
      (38 )       (12 )       (98 )       125  
Foreign
      (2 )       (2 )       60        (58 ) 
  
 
 
     
 
 
     
 
 
     
 
 
  
Total deferred provision (benefit)
      (194 )       (72 )       (440 )       551  
  
 
 
     
 
 
     
 
 
     
 
 
  
Change in valuation allowance
      28        121        57        204  
  
 
 
     
 
 
     
 
 
     
 
 
  
Total provision (benefit) for income taxes
    $ (605 )     $ 1,180      $ (387 )     $ 2,095  
  
 
 
     
 
 
     
 
 
     
 
 
  
 
The reconciliation of income taxes computed using the statutory U.S. income tax rate and the provision (benefit) for income taxes for the three and six months ended June 30, 2023 and 2022 were as follows (amounts in thousands):
 
    
Three Months Ended
June 30, 2023
    
Three Months Ended
June 30, 2022
  
Income taxes computed at the federal statutory rate
    $ (583 )       (21.0 )%    $ 759        21.0 % 
State income taxes, net of federal tax benefit
      (182 )       (6.5 )      210        5.8  
Excess tax expense (benefit) from stock options/restricted shares
      17        0.6       68        1.9  
Difference in income tax rate on foreign earnings/other
      115        4.1       22        0.6  
Change in valuation allowance
      28        1.0       121        3.3  
  
 
 
     
 
 
    
 
 
     
 
 
  
   $ (605 )       (21.8 )%    $ 1,180        32.6 % 
  
 
 
     
 
 
    
 
 
     
 
 
  
 
    
Six Months Ended
June 30, 2023
    
Six Months Ended
June 30, 2022
  
Income taxes computed at the federal statutory rate
    $ (483 )       (21.0 )%    $ 1,441        21.0 % 
State income taxes, net of federal tax benefit
      (72 )       (3.1 )      386        5.6  
Excess tax expense (benefit) from stock options/restricted shares
      40        1.7       (9 )       (0.1 ) 
Difference in income tax rate on foreign earnings/other
      71        3.1       73        1.0  
Change in valuation allowance
      57        2.5       204        3.0  
  
 
 
     
 
 
    
 
 
     
 
 
  
   $ (387 )       (16.8 )%    $ 2,095        30.5 % 
  
 
 
     
 
 
    
 
 
     
 
 
  
We evaluate deferred income taxes quarterly to determine if valuation allowances are required or should be adjusted. GAAP accounting guidance requires us to assess whether valuation allowances should be established against deferred tax assets based on all available evidence, both positive and negative, using a “more likely than not” standard. Our assessment considers, among other things, the nature of cumulative losses, forecast of future profitability, the duration of statutory carry-forward periods and tax planning alternatives. At June 30, 2023, our valuation allowance was comprised of balances within locations of Singapore, Ireland and the United Kingdom. The valuation allowance balances at these locations totaled $616,000 and $559,000 as of June 30, 2023, and December 31, 2022, respectively, and reflect net operating losses which may not be realizable in the future. In the third quarter of 2022, the Company decided to close the Singapore and Ireland operations.
The Company’s Canadian subsidiary is currently under audit by Revenue Canada for the years 2018 and 2019.