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Note 9 - Income Taxes | 12 Months Ended
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Dec. 31, 2019
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
9 . | Income Taxes
The provision (benefit) for income taxes consists of the following:
|  | Year Ended December 31, |
(In thousands) |  | 2019 |  |  | 2018 |
Federal |  |  | — |  |  |  | — |
State |  |  | — |  |  |  | — |
Total current tax provision |  |  | — |  |  |  | — |
Federal |  |  | (1,541 | ) |  |  | — |
State |  |  | — |  |  |  | — |
Total deferred tax provision |  |  | (1,541 | ) |  |  | — |
Provision (benefit) for income taxes |  | $ | (1,541 | ) |  |  | — |
In connection with the 2019 SAVSU Acquisition, the Company recognized a deferred tax liability of $1.5 million on acquired intangible assets. As a result, the Company recorded an income tax benefit of $1.5 million for the release of valuation allowance on our existing U.S. deferred tax assets as a result of the offset of deferred tax liabilities established for intangible assets from the acquisition. A reconciliation of income taxes computed using the U.S. federal statutory rate to that reflected in operations follows:
|  | Year Ended December 31, |
(In thousands) |  | 2019 |  |  | 2018 |
Tax on net income at federal statutory rate |  |  | 21 | % |  |  | 21 | %
Change in valuation allowance |  |  | (5 | %) |  |  | 2 | %
Stock-based compensation |  |  | 74 | % |  |  | 3 | %
Section 162(m) limitation on executive compensation |  |  | (17 | %) |  |  | (1 | %)
Book loss on equity method investment |  |  | (5 | %) |  |  | (1 | %)
Fair value change in warrant liability |  |  | (82 | %) |  |  | (24 | %)
Gain on stock acquisition |  |  | 64 | % |  |  | — | %
Transaction costs |  |  | (4 | %) |  |  | — | %
Tax credits |  |  | 5 | % |  |  | — | %
Expired net operating losses |  |  | (5 | %) |  |  | — | %
Other |  |  | 1 | % |  |  | — | %
Total |  |  | 47 | % |  |  | — | %
The principal components of the Company’s net deferred tax assets are as follows:
|  | December 31, |
(In thousands) |  | 2019 |  |  | 2018 |
Deferred tax assets related to: |  |  |  |  |  |  |  |
Net operating loss carryforward |  | $ | 9,495 |  |  | $ | 7,381 |
Stock-based compensation |  |  | 1,110 |  |  |  | 664 |
Accruals and reserves |  |  | 192 |  |  |  | 181 |
Inventory |  |  | 88 |  |  |  | 42 |
Lease liabilities |  |  | 208 |  |  |  | 101 |
Tax credit carryforward |  |  | 152 |  |  | –– |
Other |  |  | 4 |  |  | –– |
Total deferred tax assets |  |  | 11,249 |  |  |  | 8,369 |
Deferred tax liabilities related to: |  |  |  |  |  |  |  |
Intangibles |  |  | (2,217 | ) |  | –– |
Right-of-use assets |  |  | (218 | ) |  | –– |
Fixed assets |  |  | (108 | ) |  |  | (24 | )
Total deferred tax liabilities |  |  | (2,543 | ) |  |  | (24 | )
Total deferred taxes |  |  | 8,706 |  |  |  | 8,345 |
Less: valuation allowance |  |  | (8,706 | ) |  |  | (8,345 | )
Net deferred taxes |  | –– |  |  | –– |
The Company maintains a full valuation allowance on its net deferred tax assets. The assessment regarding whether a valuation allowance is required considers both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. In making this assessment, significant weight is given to evidence that can be objectively verified. In its evaluation, the Company considered its cumulative book losses, not including transaction gains, as significant negative evidence. Based upon a review of the four sources of income identified within ASC 740, “Accounting for Income Taxes”, the Company determined that the negative evidence outweighed the positive evidence and a full valuation allowance on its deferred tax assets will be maintained. The Company will continue to assess the realizability of its deferred tax assets going forward and will adjust the valuation allowance as needed. Our valuation allowance increased by $0.4 million from 2018 to 2019, primarily due to increases in the net operating loss carryforwards and stock compensation deferred tax assets offset by an increase in the deferred tax liabilities for intangibles. Our valuation allowance decreased by $0.4 million from 2017 to 2018, primarily due to a decrease in the deferred tax asset for net operating loss carryforwards. The Company determines its uncertain tax positions based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be sustained upon examination by the relevant income tax authorities. The Company is generally subject to examination by U.S. federal and local income tax authorities for all tax years in which loss carryforward is available. The Company applies judgment in the determination of the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. As of December 31, 2019, the Company had no uncertain tax positions. As of December 31, 2019, the Company had U.S. federal net operating loss (“NOL”) carryforwards of approximately $44.7 million, which is available to reduce future taxable income. Approximately $34.9 million of NOL will expire from 2020 through 2036, and approximately $9.8 million of NOL will be carried forward indefinitely. The NOL carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The Company is planning to complete a study during 2020 to determine whether the net operating losses are subject to such limitations. Subsequent ownership changes may further affect the limitation in future years.

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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=84230637&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=116825942&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=84230637&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=116825942&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=84230637&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 + Details
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