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Income Taxes
 3 Months Ended
Mar. 31, 2024
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 months ended March 31, 2024 and 2023:
 
    
Three Months Ended

March 31,
  
    
2024
     
2023
  
    
(Amounts in thousands)
  
Income (loss) before income taxes:
 
Domestic
    $ (316 )     $ 2,080  
Foreign
      34        (1,601 ) 
  
 
 
     
 
 
  
Income (loss) before income taxes
    $ (282 )     $ 479  
  
 
 
     
 
 
  
 
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 months ended March 31, 2024 and 2023:
 
    
Three Months Ended

March 31,
  
    
2024
     
2023
  
    
(Amounts in thousands)
  
Current provision (benefit):
      
Federal
    $ (224 )     $ 711  
State
      (39 )       170  
Foreign
      104        (446 ) 
  
 
 
     
 
 
  
Total current provision (benefit)
      (159 )       435  
  
 
 
     
 
 
  
Deferred provision (benefit):
      
Federal
      23        (248 ) 
State
      5        (60 ) 
Foreign
      (83 )       62  
  
 
 
     
 
 
  
Total deferred provision (benefit)
      (55 )       (246 ) 
  
 
 
     
 
 
  
Change in valuation allowance
      93        29  
  
 
 
     
 
 
  
Total provision (benefit) for income taxes
    $ (121 )     $ 218  
  
 
 
     
 
 
  
The reconciliation of income taxes computed using the statutory U.S. income tax rate and the provision for income taxes for the three months ended March 31, 2024 and 2023 were as follows (amounts in thousands):
 
    
Three Months Ended

March 31, 2024
    
Three Months Ended

March 31, 2023
  
Income taxes computed at the federal statutory rate
    $ (59 )       (21.0 %)    $ 100        21.0 % 
State income taxes, net of federal tax benefit
      (10 )       (3.5 )      110        23.0  
Excess tax expense (benefits) from stock options/restricted shares
      85        30.1       23        4.8  
Worthless stock deduction
      (248 )       (87.9 )      —         —   
Difference in tax rate on foreign earnings/other
      18        6.4       (44 )       (9.2 ) 
Change in valuation allowance
      93        33.0       29        6.0  
  
 
 
     
 
 
    
 
 
     
 
 
  
   $ (121 )       (42.9 %)    $ 218        45.6 % 
  
 
 
     
 
 
    
 
 
     
 
 
  
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 March 31, 2024, our valuation allowance was comprised of balances within locations of Canada, Ireland and the United Kingdom and totaled $559,000. During the quarter ended March 31, 2024, we secured a worthless stock deduction for our discontinued Singapore entity, which allowed us to recognize a current tax deduction during the 2024 period and accordingly reverse $162,000 of our valuation allowance balance. As of December 31, 2023, our valuation allowance balance totaled $628,000.
The Company’s Canadian subsidiary, which was under audit by Revenue Canada for the years 2018 and 2019 was completed in first quarter of 2024 with
no
adjustments to these tax filings.