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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The following table sets forth pretax book loss (in thousands):
| Year Ended December 31,
| 2022 |  | 2021
United States | $ | (21,948) |  |  | $ | (9,340) |
Foreign | — |  |  | 199 |
Total | $ | (21,948) |  |  | $ | (9,141) |
The following table sets forth income before taxes and the income tax expense for the years ended December 31, 2022 and 2021 (in thousands):
| Year Ended December 31,
| 2022 |  | 2021
Current: |  |  |
Federal | $ | — |  |  | $ | — |
Foreign | (4) |  |  | (75) |
State | (3) |  |  | (15) |
Total current | (7) |  |  | (90) |
Total deferred | — |  |  | — |
Income tax benefit | $ | (7) |  |  | $ | (90) |
Our effective tax rate differs from the statutory federal tax rate for the years ended December 31, 2022 and 2021 as shown in the following table (in thousands):
| Year Ended December 31,
| 2022 |  | 2021
U.S. federal income taxes at the statutory rate | $ | (4,609) |  |  | $ | (1,919) |
Goodwill impairment | 1,547 |  |  | — |
Current Year Permanent Adjustment, Paycheck Protection Program loan forgiveness | — |  |  | (514) |
State taxes, net of federal effects | (375) |  |  | (464) |
Adjustment to U.S. NOLs, UK Anti-Hybrid | — |  |  | (1,837) |
U.S. Federal and state NOL carryforward adjustment for expired NOLs | 76 |  |  | 78 |
Change in valuation allowance | 3,273 |  |  | 4,662 |
True up of prior year foreign tax expense | — |  |  | (108) |
Other | 81 |  |  | 12 |
Income tax benefit | $ | (7) |  |  | $ | (90) |
The tax effect of the temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 31, 2022 and 2021 is presented below (in thousands):
| Year Ended December 31,
| 2022 |  | 2021
Deferred tax assets (liabilities): |  |  |
Tax benefit of operating loss carry forward - Federal | $ | 28,459 |  |  | $ | 26,902 |
Tax benefit of operating loss carry forward - State | 6,429 |  |  | 6,225 |
Accrued expenses | 147 |  |  | 88 |
Deferred revenue | 129 |  |  | 287 |
Stock-based compensation | 420 |  |  | 449 |
Fixed assets | 116 |  |  | 287 |
Goodwill | 28 |  |  | 102 |
Inventory | 106 |  |  | 197 |
Intangible amortization | (80) |  |  | (1,777) |
R&D credit | 2,154 |  |  | 2,154 |
Texas margin tax temporary credit | 74 |  |  | 139 |
Other | 101 |  |  | 62 |
Total deferred tax asset, net of deferred tax liabilities | 38,492 |  |  | 35,220 |
Valuation allowance | (38,492) |  |  | (35,220) |
Net deferred tax asset | $ | — |  |  | $ | — |
The ending balances of the deferred tax asset have been fully reserved, reflecting the uncertainties as to realizability evidenced by the Company’s historical results. The change in valuation allowance for the year ended December 31, 2022 is an increase of $3,272,600. The change in valuation allowance for the year ended December 31, 2021 was a increase of $4,678,000. We and our subsidiary file federal and state tax returns on a consolidated basis. On October 1, 2019 Oblong, Inc. acquired the stock of Oblong Industries Inc. that resulted in Oblong Industries Inc.'s shareholders now owning 75% of Oblong, Inc. Therefore, an “ownership change” occurred on this date (as defined under Section 382 of the Internal Revenue Code of 1986, as amended), which places an annual limitation on the utilization of the net operating loss (“NOL”) carryforwards accumulated before the ownership change. If additional ownership changes occur in the future, the use of the net operating loss carryforwards could be subject to further limitation. As a result of this annual limitation and the limited carryforward life of the accumulated NOLs, we determined that the 2019 ownership change resulted in the permanent loss of approximately $30,880,000 of tax NOL carryforwards. At December 31, 2021, we had federal net operating loss carryforwards of $128,447,000 available to offset future federal taxable income, after Section 382 limitation considerations. At December 31, 2022, we had federal net operating loss carryforwards of $135,517,000 available to offset future federal taxable income, after section 382 limitation considerations. Of this amount, $75,456,000 will expire in various amounts from 2023 through 2037. As of December 31, 2022 and 2021, the Company also has various state net operating loss carryforwards of $104,886,000 and $101,035,000, respectively. The determination of the state net operating loss carryforwards is dependent upon apportionment percentages and state laws that can change, from year to year and impact the amount of such carryforwards. The Company has Research and Development credits of $2,154,000 at December 31, 2022 and 2021. The Research and Development credit begins to expire at the end of 2026. There were no significant matters determined to be unrecognized tax benefits taken or expected to be taken in a tax return, in accordance with ASC Topic 740 “Income Taxes” (“ASC 740”), which clarifies the accounting for uncertainty in income taxes recognized in the financial statements, that have been recorded on the Company’s Consolidated Financial Statements for the years ended December 31, 2022 and 2021. The Company does not anticipate a material change to unrecognized tax benefits in the next twelve months. Additionally, ASC 740 provides guidance on the recognition of interest and penalties related to unrecognized tax benefits. There were no interest or penalties related to income taxes that have been accrued or recognized as of and for the years ended December 31, 2022 and 2021. The Internal Revenue Service may generally access additional income tax for the most recent three years. This would generally prevent the Internal Revenue Service from opening an examination for years ended on or before December 31, 2019. However, there are exceptions that can extend the statute of limitations to six years, and in some cases, prevent the statute of limitations from ever expiring.

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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 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
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