XML 32 R20.htm IDEA: XBRL DOCUMENT v3.24.1.1.u2
Income Taxes
12 Months Ended
Dec. 31, 2023
Income Taxes [Abstract]  
INCOME TAXES

Note 12 INCOME TAXES

 

The provision for income taxes for the years ended December 31, 2023 and 2022 consisted of the following:

 

   2023   2022 
Deferred provision - federal  $4,802   $9,767 
Deferred provision - state   1,653    4,054 
    6,455    13,821 
Net change to valuation allowance   (6,455)   (13,821)
Total provision for income taxes  $
-
   $
-
 

 

A reconciliation of income taxes at the statutory federal income tax rate to the effective income tax rate for the years ended December 31, 2023 and 2022 is as follows:

 

   2023   2022 
Statutory U.S. tax rate   21.0%   21.0%
State taxes, net of federal benefit   5.6    9.0 
Fair value adjustments on convertible debentures   
-
    (7.1)
Forward purchase agreement   
-
    (8.5)
Other   0.1    0.1 
Nondeductible expenses   (4.4)   
-
 
Valuation allowance   (22.5)   (14.5)
Effective tax rate   
-
%   
-
%

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

 

The components of the net deferred tax assets at December 31, 2023 and 2022 were as follows:

 

   2023   2022 
Deferred tax assets:        
Accrued compensation  $482   $3,817 
Net operating loss carryforwards   22,873    17,193 
Capitalized software   682    1,270 
Property and equipment   12    7 
Issuance fees on convertible debentures   2,970    
-
 
Gross deferred tax assets   27,019    22,287 
Valuation allowance   (27,009)   (21,837)
Total deferred tax assets   10    450 
Deferred tax liabilities:          
Prepaid expenses   (10)   (450)
Deferred tax liabilities   (10)   (450)
Net deferred tax assets  $
-
   $
-
 

 

As of December 31, 2023 and 2022, the Company recorded a full valuation allowance to offset its deferred tax assets as the Company believes it is not more likely than not that the deferred tax assets will be fully realizable. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some 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 the periods in which those temporary differences become deductible. Due to the uncertainty of the Company’s ability to realize the benefit of the deferred tax assets, the deferred tax assets are fully offset by a valuation allowance as of December 31, 2023 and 2022.

 

As of December 31, 2023, the Company had accumulated federal losses for tax purposes of $83,400, which can be offset against future taxable income. Of this federal net loss carryforward, $1,600 will begin to expire in 2036 and $81,800 may be carried forward indefinitely. As of December 31, 2023, the Company had net accumulated state losses for tax purposes of $74,500, some of which will begin to expire in 2033. Sections 382 and 383 of the Internal Revenue Code, and similar state regulations, contain provisions that may limit the loss carryforwards available to be used to offset income in any given year upon the occurrence of certain events, including changes in the ownership interests of significant stockholders. In the event of a cumulative change in ownership in excess of 50% over a three-year period, the amount of the loss carryforwards that the Company may utilize in any one year may be limited. An analysis of the potential limitation has not been completed.