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Income Taxes
 9 Months Ended
Sep. 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 nine months ended September 30, 2023 and 2022:
 
    
Three Months Ended

September 30,
     
Nine Months Ended

September 30,
  
    
2023
     
2022
     
2023
     
2022
  
                             
    
(Amounts in thousands)
     
(Amounts in thousands)
  
Income (loss) before income taxes:
            
Domestic
    $ (211 )     $ 3,950      $ (3,205 )     $ 11,123  
Foreign
      365        (593 )       1,060        (903 ) 
  
 
 
     
 
 
     
 
 
     
 
 
  
Income (loss) before income taxes
    $ 154      $ 3,357      $ (2,145 )     $ 10,220  
  
 
 
     
 
 
     
 
 
     
 
 
  
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 nine months ended September 30, 2023 and 2022:
 
    
Three Months Ended

September 30,
     
Nine Months Ended

September 30,
  
    
2023
     
2022
     
2023
     
2022
  
                             
    
(Amounts in thousands)
     
(Amounts in thousands)
  
Current provision (benefit):
            
Federal
    $ (88 )     $ 806      $ (271 )     $ 1,836  
State
      (9 )       187        25        446  
Foreign
      93        (55 )       238        (4 ) 
  
 
 
     
 
 
     
 
 
     
 
 
  
Total current provision (benefit)
    $ (4 )     $ 938      $ (8 )     $ 2,278  
  
 
 
     
 
 
     
 
 
     
 
 
  
Deferred provision (benefit):
            
Federal
      25        12        (377 )       496  
State
      7        (7 )       (91 )       118  
Foreign
      4        (60 )       64        (118 ) 
  
 
 
     
 
 
     
 
 
     
 
 
  
Total deferred provision (benefit)
      36        (55 )       (404 )       496  
  
 
 
     
 
 
     
 
 
     
 
 
  
Change in valuation allowance
      (3 )       68        54        272  
  
 
 
     
 
 
     
 
 
     
 
 
  
Total provision (benefit) for income taxes
    $ 29      $ 951      $ (358 )     $ 3,046  
  
 
 
     
 
 
     
 
 
     
 
 
  
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 nine months ended September 30, 2023 and 2022 were as follows (amounts in thousands):
 
    
Three Months Ended

September 30, 2023
    
Three Months Ended

September 30, 2022
  
Income taxes computed at the federal statutory rate
    $ 33        21.0 %    $ 705        21.0 % 
State income taxes, net of federal tax benefit
      (2 )       (1.2 )      168        5.0  
Excess tax expense (benefit) from stock options/restricted shares
      —          —         19        0.6  
Difference in income tax rate on foreign earnings/other
      1        0.9       (9 )       (0.3 ) 
Change in valuation allowance
      (3 )       (1.9 )      68        2.0  
  
 
 
     
 
 
    
 
 
     
 
 
  
   $ 29        18.8 %    $ 951        28.3 % 
  
 
 
     
 
 
    
 
 
     
 
 
  
 
    
Nine Months Ended

September 30, 2023
    
Nine Months Ended

September 30, 2022
  
Income taxes computed at the federal statutory rate
    $ (450 )       (21.0 )%    $ 2,146        21.0 % 
State income taxes, net of federal tax benefit
      (74 )       (3.5 )      554        5.4  
Excess tax expense (benefit) from stock options/restricted shares
      40        1.9       10        0.1  
Difference in income tax rate on foreign earnings/other
      72        3.4       64        0.6  
Change in valuation allowance
      54        2.5       272        2.7  
  
 
 
     
 
 
    
 
 
     
 
 
  
   $ (358 )       (16.7 )%    $ 3,046        29.8 % 
  
 
 
     
 
 
    
 
 
     
 
 
  
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 September 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 $613,000 and $559,000 as of September 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.