XML 30 R18.htm IDEA: XBRL DOCUMENT v3.22.4
Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes

Note 12 – Income Taxes

 

The components of the provision for income taxes consists of the following for the years ended December 31, 2022 and 2021:

 

   2022   2021 
   Year Ended December 31, 
   2022   2021 
Current:          
Federal  $563,821   $6,092,730 
State   (266,248)   886,173 
Total current  $297,573   $6,978,903 
Deferred:          
Federal   (3,945,090)   1,394,686 
State   (961,468)   603,642 
Total deferred   (4,906,558)   1,998,328 
Total income tax (benefit) expense  $(4,608,985)  $8,977,231 

 

A reconciliation of income tax expense at the statutory federal income tax rate and income taxes as reflected in the financial statements is as follows:

 

   2022   2021 
   Year Ended December 31, 
   2022   2021 
Federal income tax expense at statutory rate   21.0%   21.0%
State income tax expense, net of federal tax benefit   4.8%   3.9%
Permanent differences:          
- Foreign derived intangible income deduction   1.4%   -3.5%
- Stock based compensation   -3.6%   0.2%
- Contingent consideration remeasurement   8.8%   0.0%
- Goodwill impairment   -17.1%   0.0%
- Other permanent differences   -0.6%   0.3%
Research and development credits   11.1%   -2.6%
Change in uncertain tax positions   -2.1%   1.4%
Change in valuation allowance   0.0%   0.0%
Other   0.8%   -1.0%
Effective income tax rate   24.5%   19.7%

 

Net deferred tax liabilities consist of the following components as of December 31, 2022 and 2021:

 

   2022   2021 
   December 31, 
   2022   2021 
Deferred tax assets:          
Accrued liabilities  $98,141   $- 
Reserves and allowances   765,004    166,050 
Deferred compensation   566,076    393,871 
Research and development credits   3,460,159    - 
Lease liability   85,899    - 
UNICAP   168,936    - 
Total deferred tax assets   5,144,215    559,921 
Deferred tax liabilities:          
Property and equipment, net   (609,261)   (477,542)
Intangibles, net   (6,608,914)   (6,743,972)
Prepaids   (156,053)   (560,093)
Right of use asset   (91,873)   - 
Other comprehensive income   (96,101)   - 
Other   -    (6,758)
Total deferred tax liabilities   (7,562,202)   (7,788,365)
Net deferred tax (liabilities)   (2,417,987)   (7,228,444)
Less valuation allowance   -    - 
Net deferred tax (liabilities)  $(2,417,987)  $(7,228,444)

 

At December 31, 2022, the Company had no federal net operating loss carryforwards and no federal research and development credit carryforwards. At December 31, 2022, the Company had no state net operating loss carryforwards and $288,292 of state research and development credit carryforwards. If unused, the state research credit carryforward will expire in 2036.

 

 

ASC Topic 740-10-05 requires that the impact of a tax position be recognized in the financial statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position. Our unrecognized tax benefit balances included $1,469,577 at December 31, 2022 and $1,067,853 at December 31, 2021 of tax positions that, if recognized, would impact our effective tax rate. The Company expects no material changes to the liability for unrecognized tax benefits in the next 12 months. Interest and penalties associated with uncertain tax positions are recorded as a component of income tax expense. A reconciliation of the beginning and ending amount of unrecognized benefits is as follows:

 

   December 31, 
   2022   2021 
Unrecognized tax benefits at the beginning of the year  $1,067,853   $447,831 
Gross increases - current year tax positions   1,045,590    770,069 
Gross increases - prior year tax positions   34,035    - 
Gross decreases - prior year tax positions   (677,901)   (150,047)
Unrecognized tax benefits at end of year  $1,469,577   $1,067,853 
           
Interest and penalties in year-end balance  $34,035   $- 

 

The Company is subject to taxation in the United States and other state jurisdictions. The tax years from December 31, 2019 through December 31, 2022 remain open to examination for federal income tax purposes and by the other major taxing jurisdictions to which the Company is subject. The Company is not currently under examination by any taxing authority.