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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2021
Income Taxes [Abstract] |
Income Taxes |
15) | Income Taxes
Loss before income taxes consist of the following:
|  | Years ended December 31, |
|  | 2021 |  |  | 2020 |
|  | (as Restated) |  |  | (as Restated) |
Domestic |  | $ | (122,476,000 | ) |  | $ | (7,291,000 | )
Foreign |  |  | (5,000 | ) |  |  | - |
Total loss before income taxes |  | $ | (122,481,000 | ) |  | $ | (7,291,000 | )
For each of the years ended December 31, 2021 and 2020, current tax provisions and current deferred tax provisions were recorded as follows:
|  | Years ended December 31, |
|  | 2021 |  |  | 2020 |
Current Tax Provision |  |  |  |  |  |
Federal |  | $ | - |  |  | $ | - |
State |  |  | 5,000 |  |  |  | - |
Foreign |  |  | - |  |  |  | - |
|  |  | 5,000 |  |  |  | - |
Deferred Tax Provision |  |  |  |  |  |  |  |
Federal |  |  | (5,840,000 | ) |  |  | - |
State |  |  | (1,414,000 | ) |  |  | (322,000 | )
Foreign |  |  | (1,000 | ) |  |  | - |
|  |  | (7,255,000 | ) |  |  | (322,000 | )
Change in valuation allowance |  |  | 7,314,000 |  |  |  | 322,000 |
Total tax provision for income taxes |  | $ | 64,000 |  |  | $ | - |
Deferred tax assets and liabilities consist of the effects of temporary differences as shown in the table below. Deferred tax assets have been fully reserved by a valuation allowance since it is more likely than not that such tax benefits will not be realized.
|  | As of December 31, |
|  | 2021 |  |  | 2020 |
Deferred Tax Assets: |  |  |  |  |  |
Net operating losses |  |  | 5,457,000 |  |  |  | 747,000 |
Foreign net operating losses |  |  | 595,000 |  |  |  | - |
R&D credit carryforwards |  |  | 288,000 |  |  |  | - |
Stock compensation |  |  | 1,312,000 |  |  |  | - |
Vacation accrual |  |  | 30,000 |  |  |  | - |
Contingent consideration |  |  | - |  |  |  | - |
Deferred rent |  |  | 40,000 |  |  |  | - |
Total gross deferred tax assets |  |  | 7,722,000 |  |  |  | 747,000 |
Valuation allowance |  |  | (7,467,000 | ) |  |  | (747,000) | )
Net deferred tax assets |  |  | 255,000 |  |  |  | - |
Deferred Tax Liabilities: |  |  |  |  |  |  |  |
Fixed assets |  |  | (168,000 | ) |  |  | - |
Intangibles - goodwill |  |  | (112,000 | ) |  |  | - |
Total deferred tax liabilities |  |  | (280,000 | ) |  |  | - |
Net deferred taxes |  | $ | (25,000 | ) |  | $ | - |
The reconciliation of computed expected income taxes to effective income taxes by applying the federal statutory rate of 21% is as follows:
|  | As of December 31, |
|  | 2021 |  |  | 2020 |
Tax at federal income tax rate |  |  | 21.00 | % |  |  | 21.00 | %
State income tax, net of federal tax |  |  | 1.15 | % |  |  | 0.00 | %
Non-deductible expenses/excludable items |  |  | -16.30 | % |  |  | 0.00 | %
Pass-through loss |  |  | 0.00 | % |  |  | -20.00 | %
Change in valuation allowance |  |  | -5.97 | % |  |  | -1.00 | %
Credits |  |  | 0.23 | % |  |  | 0.00 | %
Other |  |  | -0.16 | % |  |  | 0.00 | %
Provision for income taxes |  |  | -0.05 | % |  |  | 0.00 | %
The net increase in the total valuation allowance for the year ended December 31, 2021 was an increase of $6,720,000 of which $7,304,000 relates to the current year deferred expense and ($584,000) relates to the purchase accounting related to the 2021 business combinations. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary difference become deductible. Management considered the scheduled reversal of deferred tax liabilities, projected future taxable income and planning strategies in making this assessment. Based on the level of historical operating results and projections for the taxable income for the future, management has determined that it is more likely than not that the deferred taxes assets will not be utilized. Accordingly, the Company has recorded a full valuation allowance. The net deferred tax liability represents an indefinite life intangible liability related to tax deductible goodwill, partially offset by an indefinite life deferred tax asset. At December 31, 2021 and 2020 the Company has available net operating loss (“NOL”) carryforwards of approximately $20,679,000 and $0 for federal income tax purposes, respectively, of which $20,689,000 can be carried forward indefinitely. The Company has available $18,276,000 and $0 state NOLs for the years ended December 31, 2021 and 2020, respectively. The Company also has foreign NOL carryforwards of $4,759,000 and $0 for the years ended December 31, 2021 and 2020, respectively, which carry forward indefinitely. Section 382 of the Internal Revenue Code (“IRC”) imposes limits on the ability to use NOL carryforwards that existed prior to a change in control to offset future taxable income. Such limitations would reduce, potentially significantly, the gross deferred tax assets disclosed in the table above related to the NOL carryforwards. The Company continues to disclose the NOL carryforwards at their original amount in the table above as no potential limitation has been quantified. The Company has also established a full valuation allowance for all deferred tax assets, including the NOL carryforwards, since the Company could not conclude that it was more likely than not able to generate future taxable income to realize these assets. The net deferred tax liability represents an indefinite life intangible liability related to tax deductible goodwill, partially offset by an indefinite life deferred tax asset. At December 31, 2021 and 2020 the Company has federal and state income tax credit carryforwards of approximately $288,000 and $0, respectively. The credits begin to expire in 2041. In accordance with authoritative guidance, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. The Company has no uncertain tax positions as of December 31, 2021 or December 31, 2020. The Company recognizes interest and penalties related to unrecognized tax positions within the income tax expense line in the accompanying consolidated statements of operations. There were no accrued interest and penalties associated with uncertain tax positions as of December 31, 2021 or December 31, 2020. The Company is subject to U.S. federal, state, and foreign income tax. The Company's income tax returns are subject to examination by the relevant taxing authorities. As of December 31, 2021, the 2018 – 2021 tax years remain subject to examination in the U.S. federal tax, various state, and foreign tax jurisdictions. The Company is not currently under examination by federal state, or foreign jurisdictions.

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- 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 http://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 http://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 http://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 http://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 http://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 http://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 http://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 http://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 http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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