XML 28 R19.htm IDEA: XBRL DOCUMENT
v3.25.0.1

Commitments, Contingencies and Taxes | 12 Months Ended
--- | ---
Dec. 31, 2024
Commitments and Contingencies Disclosure [Abstract] |
Commitments, Contingencies, and Taxes | No te 10: Commitments, Contingencies, and Taxes Commitments The Company has commitments for future payments related to office facilities and financed equipment leases, as well as other contractual obligations primarily related to minimum payments due to outside service providers. For information regarding the Company's lease commitments, see Note 9: Leases of the Notes to the Consolidated Financial Statements. Future minimum payments on the Company's other contractual obligations are approximately as follows:
(In Thousands) |  |  |
2025 |  | $ | 4,164 |
2026 |  |  | 4,065 |
2027 |  |  | 1,383 |
2028 |  |  | — |
2029 and thereafter |  |  | — |
Total minimum payments |  | $ | 9,612 |
Contingencies The Company from time to time is a party to disputes and legal and administrative proceedings arising from the ordinary course of business. We could become in the future subject to legal proceedings, governmental investigations, and claims in the ordinary course of business, including employment claims, contract-related claims, and claims of alleged infringement of third-party patents, trademarks, and other intellectual property rights. Such claims, even if not meritorious, could force us to expend significant financial and managerial resources and could be material. See (p) Guarantees section of Note 1: Description of Business and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for additional information. In certain agreements, the Company has agreed to indemnification provisions of varying scope and terms with customers, vendors and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of agreements or representations and warranties made by the Company, services to be provided by the Company and intellectual property infringement claims made by third parties. As a result of these provisions, the Company may from time to time provide certain levels of financial support to contract parties to seek to minimize the impact of any associated litigation in which they may be involved. To date, there have been no known events or circumstances that have resulted in any material costs related to these indemnification provisions and no liabilities therefore have been recorded in the accompanying Consolidated Financial Statements. However, the maximum potential amount of the future payments the Company could be required to make under these indemnification provisions could be material. On October 21, 2022, the Shareholder Representatives for the former shareholders of Telmetrics, Inc. (an entity acquired by the Company in 2018) filed litigation against the Company in the U.S. District Court for the District of Delaware. The plaintiffs are asserting claims under a share purchase agreement and escrow agreement regarding entitlement to an earnout of up to $3.0 million and $1.0 million that was placed in escrow to secure indemnification obligations. On March 22, 2023, the plaintiffs filed an amended complaint also seeking substantial punitive damages, followed by a second amended complaint on May 9, 2023. On February 2, 2024, the Magistrate Judge issued a report and recommendation advising the U.S. District Court Judge to dismiss certain claims from the second amended complaint and to allow other claims to proceed to discovery. On July 17, 2024, the U.S. District Court Judge adopted portions of the Magistrate Judge's recommendation. The parties have begun discovery. While we believe we have meritorious defenses to this lawsuit and are vigorously defending against it, litigation is inherently uncertain and we cannot currently predict the ultimate outcome of this matter. While any litigation contains an element of uncertainty, the Company is not aware of any legal proceedings or claims which are pending that the Company believes, based on current knowledge, will have, individually or taken together, a material adverse effect on the Company’s financial condition, results of operations or liquidity. Taxes The components of the loss before income tax expense consisted of the following:
|  | Year Ended December 31, |
(In Thousands) |  | 2024 |  |  | 2023 |
United States |  | $ | (4,565 | ) |  | $ | (9,829 | )
Foreign |  |  | (2 | ) |  |  | 13 |
Loss before income tax expense |  | $ | (4,567 | ) |  | $ | (9,816 | )
Income tax expense consisted of the following:
|  | Year Ended December 31, |
(In Thousands) |  | 2024 |  |  | 2023 |
Current federal provision |  |  |  |  |  |
State |  | $ | 49 |  |  | $ | 78 |
Foreign |  |  | — |  |  |  | — |
Deferred provision (benefit) |  |  |  |  |  |
Federal |  |  | 160 |  |  |  | 25 |
State |  |  | 171 |  |  |  | (9 | )
Total income tax expense |  | $ | 380 |  |  | $ | 94 |
The Company's income tax expense differed from the amounts computed by applying the U.S. federal statutory rate to the loss before provision for income taxes as a result of the following:
|  | Year Ended December 31, |
(In Thousands) |  | 2024 |  |  | 2023 |
Income tax benefit at U.S. statutory rate |  | $ | (959 | ) |  | $ | (2,061 | )
State taxes, net of valuation allowance |  |  | (129 | ) |  |  | (339 | )
Foreign taxes |  |  | 92 |  |  |  | 3 |
Non-deductible items |  |  | 13 |  |  |  | (29 | )
Stock-based compensation (1) |  |  | 145 |  |  |  | 101 |
Valuation allowance |  |  | 491 |  |  |  | 2,307 |
Tax credits |  |  | (474 | ) |  |  | (282 | )
Goodwill tax basis difference |  |  | 1,201 |  |  |  | 394 |
Total income tax expense |  | $ | 380 |  |  | $ | 94 |
(1) Includes non-deductible stock-based compensation and excess tax benefits and shortfalls from stock-based compensation The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below and reflect the 21% U.S. federal statutory rate for the years ended December 31, 2024 and 2023:
|  | As of December 31, 2024 |
(In Thousands) |  | 2024 |  |  | 2023 |
Deferred tax assets: |  |  |  |  |  |
Accrued liabilities not currently deductible |  | $ | 357 |  |  | $ | 559 |
Intangible assets-excess of financial statement over tax amortization |  |  | 3,276 |  |  |  | 2,096 |
Stock-based compensation |  |  | 941 |  |  |  | 741 |
Federal net operating and capital losses |  |  | 42,283 |  |  |  | 42,774 |
Research & experimental tax and other credit carryforwards |  |  | 6,198 |  |  |  | 5,612 |
Lease liability |  |  | 307 |  |  |  | 416 |
Capitalized research and development |  |  | 2,170 |  |  |  | 1,764 |
Other |  |  | 274 |  |  |  | 337 |
Gross deferred tax assets |  | $ | 55,806 |  |  | $ | 54,299 |
Valuation allowance |  |  | (54,597 | ) |  |  | (54,105 | )
Net deferred tax assets |  | $ | 1,209 |  |  | $ | 194 |
Deferred tax liabilities: |  |  |  |  |  |
Fixed assets |  | $ | (295 | ) |  | $ | — |
Intangible assets-excess of tax over financial statement amortization |  |  | (1,433 | ) |  |  | — |
Right-of-use lease asset |  |  | — |  |  |  | (404 | )
Other |  |  | (60 | ) |  |  | (39 | )
Net deferred tax liabilities |  | $ | (579 | ) |  |  | (249 | )
As of December 31, 2024, the Company’s federal and state net operating loss ("NOL") carryforwards were approximately $179.8 million and $60.1 million, respectively. Of the total federal NOL carryforwards reported, we have accumulated $56.7 million with an indefinite life as of December 31, 2024. The remaining federal and state NOL carryforwards will begin to expire in 2027 and 2028, respectively, for income tax purposes. As of December 31, 2024, the Company’s federal research and development credit carryforwards were $6.5 million, which will begin to expire in 2029. The Tax Reform Act of 1986 limits the use of NOL and tax credit carryforwards in certain situations where changes occur in the stock ownership of a company. The Company is not aware that any such change has occurred related to these specific tax attributes, or that the utilization of the carryforwards is limited such that these NOL or tax credit carryforwards will likely never be utilized. Accordingly, the Company has included these federal NOL and tax credit carryforwards in its deferred tax assets (subject to valuation allowance). The Company has recorded a deferred tax asset for stock-based compensation recorded on unexercised non-qualified stock options and certain restricted shares and restricted share units. The ultimate realization of this asset is dependent upon the fair value of the Company’s stock when the options are exercised and when restricted shares or restricted share units vest, and generation of sufficient taxable income to realize the benefit of the related tax deduction. The Tax Cuts and Jobs Act contained a provision which requires the capitalization of Section 174 costs incurred in years beginning on or after January 1, 2022. Section 174 costs are expenditures which represent research and development costs that are incident to the development or improvement of a product, process, formula, invention, computer software, or technique. This provision changes the treatment of Section 174 costs such that the expenditures are no longer allowed as an immediate deduction but rather must be capitalized and amortized. The Company regularly reviews deferred tax assets to assess whether it is more likely than not that its deferred tax assets will be realized and, if necessary, establishes a valuation allowance for portions of such assets to reduce the carrying value. In assessing whether it is more likely than not that the Company’s deferred tax assets will be realized, factors considered included: historical taxable income, historical trends related to customer usage rates, projected revenues and expenses, macroeconomic conditions, issues facing the industry, existing contracts, the Company’s ability to project future results and any appreciation of its other assets. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible. The Company considered the future reversal of deferred tax liabilities, carryback potential, projected taxable income, and tax planning strategies as well as its history of taxable income or losses in the relevant jurisdictions in making this assessment. Based on the level of historical taxable losses and the uncertainty of projections for future taxable income over the periods for which the deferred tax assets are deductible, with the exception of certain insignificant foreign deferred tax assets, the Company concluded that it is not more likely than not that the gross deferred tax assets will be realized and, accordingly, recorded 100% valuation allowance against these deferred tax assets as of both December 31, 2024 and 2023. From time to time, various state, federal and other jurisdictional tax authorities undertake audits of the Company and its filings. In evaluating the exposure associated with various tax filing positions, the Company on occasion accrues charges for uncertain positions. Resolution of uncertain tax positions will impact the Company’s effective tax rate when settled. The Company does not have any significant accruals for uncertain tax positions including interest or penalties. The provision for income taxes includes the impact of contingency provisions and changes to contingencies that are considered appropriate. The Company files U.S. federal, certain U.S. states, and certain foreign tax returns. Generally, U.S. federal, U.S. state, and foreign tax returns filed for years after 2013 are within the statute of limitations and are subject to review and adjustment by the Internal Revenue Service. The following table summarizes activity related to tax contingencies, which are recorded as an offset to deferred tax assets:
(In Thousands) |  |  |
Gross tax contingencies—January 1, 2023 |  | $ | 1,384 |
Gross increases to current period tax positions |  |  | 25 |
Gross tax contingencies—December 31, 2023 |  | $ | 1,409 |
Gross increases to current period tax positions |  |  | 60 |
Gross tax contingencies—December 31, 2024 |  | $ | 1,469 |

X
- Definition Commitments contingencies income tax and other. + References No definition available. + Details
Name: | mchx_CommitmentsContingenciesIncomeTaxAndOtherDisclosureTextBlock
Namespace Prefix: | mchx_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_CommitmentsAndContingenciesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration