SeaChange International, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

Income Taxes (Tables)

12 Months Ended

Jan. 31, 2023

Components of Loss from Operations before Income Taxes

The components of loss from operations before income taxes are as follows:


	For the Fiscal Years Ended January 31,
	2023			2022
	(Amounts in thousands)
Domestic	$	(4,458	)	$	(6,616	)
Foreign		(7,142	)		(829	)
Loss before income taxes	$	(11,600	)	$	(7,445	)

Components of Income Tax Provision (Benefit) from Operations

The components of the income tax (benefit) provision from operations are as follows:


	For the Fiscal Years Ended January 31,
	2023			2022
	(Amounts in thousands)
Current:
Federal	$	—		$	—
State		40			(6	)
Foreign		(221	)		(9	)
Income tax benefit	$	(181	)	$	(15	)
Deferred:
Foreign		(15	)		—
Total		(15	)		—
Income tax benefit	$	(196	)	$	(15	)

The Company recorded an income tax benefit of less than $0.2 million for the year ended January 31, 2023. The Company’s effective tax rate in fiscal 2023, and in future periods, may fluctuate as a result of changes in jurisdictional forecasts where losses cannot be benefitted due to the existence of valuation allowances on deferred tax assets, changes in actual results versus estimates, or changes in tax laws, regulations, accounting principles or interpretations thereof.

Income Tax Provision (Benefit) for Continuing Operations Computed Using Federal Statutory Income Tax Rate

The income tax benefit was computed using the federal statutory income tax rate and average state statutory rates, net of related federal benefits. The provision differs from the Company’s effective tax rate primarily due to the following:


	For the Fiscal Years Ended January 31,
	2023			2022
	(Amounts in thousands)
Statutory U.S. federal tax rate (21%)	$	(2,436	)	$	(1,563	)
State taxes, net of federal tax benefit		(127	)		(6	)
Losses not benefitted		(939	)		1,593
Non-deductible stock compensation expense		154			292
Other non-deductible items		353			(642	)
Innovative technology and development incentive		(206	)		(264	)
Foreign tax rate differential		(51	)		70
Expiration of federal tax credits		1,145			1,179
Goodwill impairment		1,911			—
Current fiscal year impact of FIN 48		—			(674	)
Income tax benefit	$	(196	)	$	(15	)

Components of Deferred Income Taxes

The components of deferred income taxes are as follows:


	As of January 31,
	2023			2022
	(Amounts in thousands)
Deferred tax assets:
Accruals and reserves	$	386		$	79
Deferred revenue		919			801
Stock-based compensation expense		143			232
U.S. federal, state and foreign tax credits		7,659			7,146
Property and equipment		44			219
Lease liabilities		321			510
Intangible assets		154			44
Other		57			419
Loss carryforwards		33,650			36,161
Capitalized R&D costs for tax purposes		2,009			—
Deferred tax assets		45,342			45,611
Less: Valuation allowance		(44,960	)		(44,920	)
Deferred tax assets, net of valuation allowance		382			691
Deferred tax liabilities:
Right-of-use assets		(321	)		(510	)
Other		(61	)		(181	)
Deferred tax liabilities		(382	)		(691	)
Net deferred tax assets and liabilities	$	—		$	—

Reconciliation of Total Amounts of Gross Unrecognized Tax Benefits

A reconciliation of gross unrecognized tax benefits is as follows:


	For the Fiscal Years Ended January 31,
	2023			2022
	(Amounts in thousands)
Balance of gross unrecognized tax benefits, beginning of period	$	3,454		$	4,632
Decrease due to expiration of statute of limitation		(219	)		(116	)
Settlements and credit expiration		—			(1,049	)
Effect of currency translation		—			(13	)
Balance of gross unrecognized tax benefits, end of period	$	3,235		$	3,454