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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes |
11. | Income Taxes
The components of income before income taxes as shown in the accompanying Consolidated Statement of Operations, consisted of the following for the years ended December 31, 2024, 2023 and 2022:
|  | Years Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
|  | (Amounts in thousands) |
Income (loss) before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  | $ | 1,556 |  |  | $ | (6,222 | ) |  | $ | 13,892 |
Foreign |  |  | 2,868 |  |  |  | (2,809 | ) |  |  | (1,401 | )
Income (loss) before income taxes |  | $ | 4,424 |  |  | $ | (9,031 | ) |  | $ | 12,491 |
The Company has foreign subsidiaries which generate revenues from foreign clients. Additionally, the Company has foreign subsidiaries which provide services to its U.S. operations. Accordingly, the Company allocates a portion of its income to these subsidiaries based on a “transfer pricing” model and reports such income as foreign in the above table. The provision (benefit) for income taxes, as shown in the accompanying Consolidated Statement of Operations, consisted of the following for the years ended December 31, 2024, 2023 and 2022:
|  | Years Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
|  | (Amounts in thousands) |
Current provision (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 672 |  |  | $ | (473 | ) |  | $ | 2,293 |
State |  |  | 93 |  |  |  | (23 | ) |  |  | 653 |
Foreign |  |  | 762 |  |  |  | 316 |  |  |  | 178 |
Total current provision (benefit) |  |  | 1,527 |  |  |  | (180 | ) |  |  | 3,124 |
Deferred provision (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (445 | ) |  |  | (648 | ) |  |  | 678 |
State |  |  | (52 | ) |  |  | (133 | ) |  |  | 162 |
Foreign |  |  | 6 |  |  |  | (1,001 | ) |  |  | (433 | )
Total deferred provision (benefit) |  |  | (491 | ) |  |  | (1,782 | ) |  |  | 407 |
Change in valuation allowance |  |  | (14 | ) |  |  | 69 |  |  |  | 248 |
Total provision (benefit) for income taxes |  | $ | 1,022 |  |  | $ | (1,893 | ) |  | $ | 3,779 |
The reconciliation of income taxes computed using our statutory U.S. income tax rate and the provision (benefit) for income taxes for the years ended December 31, 2024, 2023 and 2022 were as follows:
|  | Years Ended December 31, |
(Amounts in thousands) |  | 2024 |  |  | 2023 |  |  | 2022 |
Income taxes computed at the federal statutory rate |  | $ | 929 |  |  |  | 21.0 | % |  | $ | (1,897 | ) |  |  | (21.0 | %) |  | $ | 2,623 |  |  |  | 21.0 | %
State income taxes, net of federal tax benefit |  |  | 21 |  |  |  | 0.5 |  |  |  | (198 | ) |  |  | (2.2 | ) |  |  | 804 |  |  |  | 6.4 |
Shortfalls in expected tax benefits from stock options/RSUs |  |  | 102 |  |  |  | 2.3 |  |  |  | 220 |  |  |  | 2.4 |  |  |  | 56 |  |  |  | 0.5 |
Worthless stock deduction |  |  | (248 | ) |  |  | (5.6 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Difference in tax rate on foreign earnings/other |  |  | 232 |  |  |  | 5.2 |  |  |  | (87 | ) |  |  | (1.0 | ) |  |  | 48 |  |  |  | 0.4 |
Change in valuation allowance |  |  | (14 | ) |  |  | (0.3 | ) |  |  | 69 |  |  |  | 0.8 |  |  |  | 248 |  |  |  | 2.0 |
|  | $ | 1,022 |  |  |  | 23.1 | % |  | $ | (1,893 | ) |  |  | (21.0 | %) |  | $ | 3,779 |  |  |  | 30.3 | %
The components of the deferred tax assets and liabilities were as follows:
|  | At December 31, |
|  | 2024 |  |  | 2023 |
|  | (Amounts in thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |
Allowance for credit losses |  | $ | 100 |  |  | $ | 150 |
Accrued vacation and bonuses |  |  | 403 |  |  |  | 437 |
Stock-based compensation expense |  |  | 2,316 |  |  |  | 2,100 |
Acquisition-related transaction costs |  |  | 455 |  |  |  | 471 |
Severance liabilities |  |  | 448 |  |  |  | — |
Net operating losses |  |  | 452 |  |  |  | 628 |
Other |  |  | 157 |  |  |  | — |
Total deferred tax assets |  |  | 4,331 |  |  |  | 3,786 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Prepaid expenses |  |  | 776 |  |  |  | 488 |
Depreciation, intangibles and contingent consideration |  |  | 1,805 |  |  |  | 1,877 |
Total deferred tax liabilities |  |  | 2,581 |  |  |  | 2,365 |
Valuation allowance |  |  | (452 | ) |  |  | (628 | )
Net deferred tax asset (liability) |  | $ | 1,298 |  |  | $ | 793 |
For the three years ending on December 31, 2024, the Company had no unrecognized tax benefits related to uncertain tax positions. 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 December 31, 2024, our valuation allowance was comprised of net operating losses in Ireland and the United Kingdom totaled $452,000. During the quarter ended March 31, 2024, we secured a worthless stock deduction for our dissolved Singapore entity, which allowed us to recognize a current tax deduction during the 2024 period and, accordingly, we reversed $162,000 of our valuation allowance. At December 31, 2023 and 2022, our valuation allowance totaled $628,000 and $559,000, respectively, and was comprised of balances in Singapore, Ireland and the United Kingdom. Our valuation allowance reflects net operating losses which may not be realized in the future.

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