Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 8. Income Taxes

The provision for income tax attributable to continuing operations for the years ended December 31 is as follows:

	2023			2022
Current provision:
Federal	$	(1	)	$	63
State		10			-
Total current provision		9			63
Deferred provision:
Federal		-			-
State		-			-
Total deferred provision		-			-
Provision:
Federal		(1	)		63
State		10			-
Total provision	$	9		$	63

The current tax provision related to discontinued operations for the years ended December 31, 2023 and 2022 was $0 and $58, respectively. The deferred tax benefit related to discontinued operations for the years ended December 31, 2023 and 2022 was $0 and $45, respectively. These amounts are combined with amounts related to continuing operations on the Consolidated Statements of Cash Flows.

Income tax expense at the statutory tax rate is reconciled to the overall income tax expense for the years ended December 31 as follows:

	2023			2022
Federal income tax from continuing operations at statutory rates	$	(1,090	)	$	(2,129	)
State income taxes, net of federal tax effect		(64	)		(89	)
Permanent differences		-			-
Rate difference in NOL Carryback		-			57
Other		(77	)		22
Change in state tax rate		-			149
Income taxes from discontinued operations		-			-
Change in valuation allowance		1,240			2,053
Provision for income taxes	$	9		$	63

The effective tax rate for the years ended December 31, 2023 and 2022 was (.18%) and (.62%) respectively, which can differ from the statutory income tax rate due to various factors, including the establishment and change in a valuation allowance. During the year ended 2021, the Company established a valuation allowance on our deferred tax asset, which is reflected in income tax expense on the Consolidated Statements of Operations. The valuation allowance represents our determination that, more likely than not, we will be unable to realize the value of such assets at this time due to the uncertainty of future profitability.

ASC 740 requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company's ability to generate sufficient taxable income within the carryforward period. The net deferred tax assets and liabilities as of December 31, 2023 and 2022 are comprised of the following:
 

	2023			2022
Deferred tax assets:
Net operating loss carryforwards	$	3,885		$	2,744
Accounts receivable		30			20
Inventories		31			173
Accrued vacation and bonus		4			67
Intangibles and Goodwill		395			335
Operating lease liabilities		554			610
Other		264			231
Total deferred tax assets		5,163			4,180
Deferred tax liabilities:
Operating lease right-of-use assets		(303	)		(546	)
Prepaid expenses		(8	)		(22	)
Total deferred tax liabilities		(311	)		(568	)
Net deferred tax asset, before allowance		4,852			3,612
Valuation allowance		(4,852	)		(3,612	)
Net deferred tax asset	$	-		$	-

Net operating losses and tax credit carryforwards as of December 31, 2023 are as follows:

			Expiration Years
Net operating losses, federal (After December 31, 2017)	$	17,531	Do not expire
Net operating losses, state (After December 31, 2017)	$	3,481	Do not expire
Tax credits, federal	$	8	2042

The Company’s ability to utilize its net operating loss (“NOL”) carryforwards may be substantially limited due to ownership changes that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), as well as similar state provisions. These ownership changes may limit the amount of NOL carryforwards that can be utilized annually to offset future taxable income and tax, respectively. Further, if the Company experiences such an ownership change and does not satisfy certain requirements in Section 382 of the Code to continue its business enterprise (which generally requires that the Company continue its historic business or use a significant portion of its historic business assets in a business for the two-year period beginning on the date of the ownership change), its NOL carryforwards may be disallowed, subject to certain exceptions. In general, an “ownership change,” as defined by Section 382 of the Code, results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percent of the outstanding stock of a company by certain stockholders or public groups.

Accounting for uncertainty in income taxes is based on a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We recognize in our Consolidated Financial Statements only those tax positions that are more-likely-than-not to be sustained as of the adoption date, based on the technical merits of the position. Each year we perform a comprehensive review of our material tax positions.

A valuation allowance has been provided as there is uncertainty that the deferred tax assets will be realized. The valuation allowance as of December 31, 2023 and 2022, respectively, primarily relates to net operating loss carryforwards, goodwill, and intangible assets.

Our policy is to recognize interest and penalties related to uncertain tax benefits in income tax expense. As we had no uncertain tax benefits during 2023 and 2022, we had no accrued interest or penalties related to uncertain tax positions in either year.

We are subject to the following material taxing jurisdictions: United States and Colorado. The tax years that remain open to examination by the Internal Revenue Service are 2020 and years thereafter. The tax years that remain open to examination by the State of Colorado are 2019 and years thereafter.