XML 39 R20.htm IDEA: XBRL DOCUMENT
v3.23.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Note 13. Income Taxes Income Taxes The income tax provision (benefit) is as follows (in thousands):
|  | For the Years Ended December 31, |
|  | 2022 |  |  | 2021 |
Current: |  |  |  |  |  |
U.S. federal |  | $ | (13 | ) |  | $ | — |
State and local |  |  | 24 |  |  |  | 12 |
Foreign |  |  | 43 |  |  |  | 218 |
Total current provision |  |  | 54 |  |  |  | 230 |
Deferred: |  |  |  |  |  |
U.S. federal |  |  | 10 |  |  |  | (2,203 | )
State and local |  |  | 20 |  |  |  | (76 | )
Total deferred provision (benefit) |  |  | 30 |  |  |  | (2,279 | )
Total tax provision |  | $ | 84 |  |  | $ | (2,049 | )
Tax Rate Reconciliation Reconciliations of the total income tax provision tax rate to the statutory federal income tax rate of 21% for the years ended December 31, 2022 and 2021, respectively, are as follows (in thousands):
|  | For the Years Ended December 31, |
|  | 2022 |  |  | 2021 |
Income taxes at statutory rates |  | $ | (1,802 | ) |  | $ | (2,549 | )
State income tax, net of federal benefit |  |  | 44 |  |  |  | (64 | )
Permanent items |  |  | 52 |  |  |  | 86 |
Equity based compensation |  |  | 298 |  |  |  | (364 | )
Change in fair value of contingent consideration |  |  | — |  |  |  | 428 |
Federal research credits |  |  | (374 | ) |  |  | (313 | )
Federal return to provision |  |  | (1 | ) |  |  | 73 |
Foreign taxes |  |  | 43 |  |  |  | 218 |
Other |  |  | 77 |  |  |  | 74 |
Change in federal valuation allowance |  |  | 1,747 |  |  |  | 362 |
|  | $ | 84 |  |  | $ | (2,049 | )
Significant Components of Current and Deferred Taxes The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows (in thousands):
|  | December 31, |
|  | 2022 |  |  | 2021 |
Deferred tax assets: |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 5,374 |  |  | $ | 7,247 |
Research and AMT credits |  |  | 3,742 |  |  |  | 3,365 |
Stock based compensation |  |  | 1,891 |  |  |  | 1,360 |
Lease liability |  |  | 611 |  |  |  | 746 |
Section 174 R&D Capitalization |  |  | 2,319 |  |  |  | — |
Accrued and other |  |  | 1,100 |  |  |  | 506 |
|  |  | 15,037 |  |  |  | 13,224 |
Less valuation allowance |  |  | (11,884 | ) |  |  | (9,452 | )
Deferred tax assets, net of allowance |  |  | 3,153 |  |  |  | 3,772 |
Deferred tax liabilities: |  |  |  |  |  |
Fixed assets |  |  | (520 | ) |  |  | (449 | )
Goodwill |  |  | (418 | ) |  |  | (349 | )
Right-of-use asset |  |  | (556 | ) |  |  | (676 | )
Intangible asset |  |  | (1,798 | ) |  |  | (2,407 | )
Deferred tax liabilities |  |  | (3,292 | ) |  |  | (3,881 | )
Total deferred tax liabilities |  | $ | (139 | ) |  | $ | (109 | )
We have established a valuation allowance against our net deferred tax assets due to the uncertainty surrounding the realization of such assets. The Company periodically evaluates the recoverability of the deferred tax assets. At such time it is determined that it is more likely than not that deferred assets are realizable, the valuation allowance will be reduced. The Company has recorded a valuation allowance of $11.9 million as of December 31, 2022 as it does not believe it is more likely than not that certain deferred tax assets will be realized due to the recent history of both pre-tax book income and losses, the lack of taxable income available in carryback periods or feasible tax-planning strategies, the limited existing taxable temporary differences, and the subjective nature of forecasting future taxable income into the future. We increased our valuation allowance by approximately $2.4 million during the year ended December 31, 2022. At December 31, 2022 the Company had federal and state tax loss carryforwards of approximately $21.6 million, and $9.6 million, respectively. The federal loss generated post 2018 of $10.2 million will carryforward indefinitely and be available to offset up to 80% of future taxable income each year. The remaining federal and state net operating loss carryforwards begin to expire in 2029 and 2026, respectively, if unused. At December 31, 2022 the Company had federal and state tax credit carryforwards of approximately $2.0 million, and $1.7 million, respectively, after reduction for uncertain tax positions. The federal credits will begin to expire in 2026, if unused, and the state credits carryforwards indefinitely. The Internal Revenue Code (IRC) Sections 382 and 383 limit annual use of NOL and research and development credit carryforwards in the event a cumulative change in ownership of more than 50% occurs within a three-year period. The Company completed an ownership change analysis and there is no ownership change in 2022. If a requisite ownership change occurs, the amount of remaining tax attribute carryforwards available to offset taxable income and income tax expense in future years may be restricted or eliminated. If eliminated, the related asset would be removed from deferred tax assets with a corresponding reduction in the valuation allowance. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, will not impact the Company’s effective tax rate. The following table summarizes the reconciliation of the unrecognized tax benefits activity during the years ended December 31 (in thousands):
|  | 2022 |  |  | 2021 |
Beginning unrecognized tax benefits |  | $ | 1,217 |  |  | $ | 879 |
Gross increases - tax positions in prior period |  |  | (50 | ) |  |  | 178 |
Gross decreases – tax positions in prior period |  |  | (9 | ) |  |  | — |
Gross increases - current year tax positions |  |  | 147 |  |  |  | 123 |
Purchase accounting |  |  | — |  |  |  | 37 |
Ending unrecognized tax benefits |  | $ | 1,305 |  |  | $ | 1,217 |
The unrecognized tax benefit amounts are reflected in the determination of the Company’s deferred tax assets. If recognized, $120,000 of these amounts would impact the company’s effective tax rate. We do not foresee material changes to our uncertain tax benefits within the next twelve months. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company has an accrual for interest or penalties of $0.1 million on the Company’s balance sheets as of December 31, 2022 and 2021. The Company has recognized no interest and/or penalties in the Statement of Operations for each of the years ended December 31, 2022 and 2021, respectively. Due to the existence of federal and state net operating loss and credit carryovers, the Company’s tax years that remain open and subject to examination by tax jurisdiction are years 2002 and forward for federal and years 2006 and forward for the state of California.

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

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration