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Note 8 - Income Taxes | 12 Months Ended
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Dec. 31, 2021
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
8. | Income taxes
The following are the domestic and foreign components of the Company's loss before income taxes:
|  | Year Ended December 31, |
(In thousands) |  | 2021 |  |  | 2020 |  |  | 2019 |
Domestic |  | $ | (27,317 | ) |  | $ | (597 | ) |  | $ | (3,198 | )
Foreign |  |  | (436 | ) |  |  | - |  |  |  | - |
Total |  | $ | (27,753 | ) |  | $ | (597 | ) |  | $ | (3,198 | )
Income tax benefit consists of the following:
|  | Year Ended December 31, |
(In thousands) |  | 2021 |  |  | 2020 |  |  | 2019 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | - |  |  | $ | - |  |  | $ | - |
State |  |  | - |  |  |  | 33 |  |  |  | - |
Foreign |  |  | 9 |  |  |  | - |  |  |  | - |
Total current tax provision |  |  | 9 |  |  |  | 33 |  |  |  | - |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (17,703 | ) |  |  | (3,297 | ) |  |  | (1,541 | )
State |  |  | (2,424 | ) |  |  | - |  |  |  | - |
Foreign |  |  | - |  |  |  | - |  |  |  | - |
Total deferred tax benefit |  |  | (20,127 | ) |  |  | (3,297 | ) |  |  | (1,541 | )
Income tax benefit |  | $ | (20,118 | ) |  | $ | (3,264 | ) |  | $ | (1,541 | )
In the years ended December 31, 2021, 2020, and 2019, income tax benefit included excess tax benefits from stock-based compensation of $10.5 million, $3.2 million, and $2.3 million, respectively. In connection with the 2021 Global Cooling acquisition, the Company recognized a deferred tax liability estimated to be $24.1 million. As a result, the Company recorded an income tax benefit of $8.0 million for the release of valuation allowance on our existing U.S. deferred tax assets as a result of the offset of the deferred tax liabilities established for intangible assets from the acquisition. In connection with the 2021 Sexton acquisition, the Company recorded a deferred tax liability estimated to be $1.5 million with an offset to goodwill. In connection with the 2020 SciSafe acquisition, the Company recognized a deferred tax liability of $3.3 million on acquired intangible assets. As a result, the Company recorded an income tax benefit of $3.3 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. 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, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Federal statutory tax |  |  | 21 | % |  |  | 21 | % |  |  | 21 | %
State tax, net of federal benefit |  |  | 7 | % |  |  | 39 | % |  |  | - |
Stock compensation |  |  | 38 | % |  |  | 538 | % |  |  | 74 | %
Sec. 162(m) limitation on executive compensation |  |  | (12 | %) |  |  | (35 | %) |  |  | (17 | %)
Fair value change in contingent consideration |  |  | (2 | %) |  |  | (81 | %) |  |  | - |
Fair value change in warrant liability |  |  | - |  |  |  | 127 | % |  |  | (82 | %)
Transaction costs |  |  | (1 | %) |  |  | (6 | %) |  |  | (4 | %)
Gain on stock acquisition |  |  | 5 | % |  |  | - |  |  |  | 64 | %
Tax credits |  |  | - |  |  |  | 12 | % |  |  | 5 | %
Change in valuation allowance |  |  | 21 | % |  |  | 35 | % |  |  | (5 | %)
Book loss on equity method investment |  |  | - |  |  |  | - |  |  |  | (5 | %)
Expired net operating losses |  |  | (5 | %) |  |  | (100 | %) |  |  | (5 | %)
Other |  |  | - |  |  |  | (3 | %) |  |  | 1 | %
Total |  |  | 72 | % |  |  | 547 | % |  |  | 47 | %
The principal components of the Company’s net deferred tax assets are as follows as of December 31, 2021 and 2020:
(In thousands) |  | 2021 |  |  | 2020 |
Deferred tax assets related to: |  |  |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 27,500 |  |  | $ | 12,314 |
Stock-based compensation |  |  | 2,066 |  |  |  | 1,678 |
Accruals and reserves |  |  | 2,902 |  |  |  | 427 |
Inventory |  |  | 236 |  |  |  | 142 |
Lease liabilities |  |  | 4,198 |  |  |  | 2,247 |
Tax credit carryforward |  |  | 594 |  |  |  | 225 |
Other |  |  | 318 |  |  |  | 48 |
Total deferred tax assets |  |  | 37,814 |  |  |  | 17,081 |
Deferred tax liabilities related to: |  |  |  |  |  |  |  |
Intangibles |  |  | (35,241 | ) |  |  | (5,025 | )
Right-of-use assets |  |  | (4,070 | ) |  |  | (2,261 | )
Fair value change in investments |  |  | (294 | ) |  |  | (287 | )
Fixed assets |  |  | (1,203 | ) |  |  | (959 | )
Other |  |  | - |  |  |  | (51 | )
Total deferred tax liabilities |  |  | (40,808 | ) |  |  | (8,583 | )
Net deferred tax (liabilities) assets before valuation allowance |  |  | (2,994 | ) |  |  | 8,498 |
Less: valuation allowance |  |  | (2,493 | ) |  |  | (8,498 | )
Net deferred tax liabilities |  | $ | (5,487 | ) |  | $ | - |
Realization of deferred tax assets is dependent upon the generation of future taxable income, if any, the timing and amount of which are uncertain. The assessment regarding whether a valuation allowance is required on deferred tax assets considers the evaluation of both positive and negative evidence when concluding whether it is more likely than not that deferred tax assets are realizable. The valuation allowance recorded as of December 31, 2021 and 2020 primarily relates to deferred tax assets for net operating loss carryforwards. The changes in the valuation allowance for deferred tax assets were as follows:
(In thousands) |  | 2021 |  |  | 2020 |  |  | 2019 |
Balance at January 1 |  | $ | 8,498 |  |  | $ | 8,706 |  |  | $ | 8,345 |
Deferred tax liabilities assumed through acquisitions |  |  | (8,498 | ) |  |  | (3,297 | ) |  |  | (1,541 | )
Charged to income tax expense |  |  | 2,493 |  |  |  | 3,089 |  |  |  | 1,902 |
Balance at December 31 |  | $ | 2,493 |  |  | $ | 8,498 |  |  | $ | 8,706 |
As of December 31, 2021, the Company had U.S. federal net operating loss (“NOL”) carryforwards of approximately $120.6 million. Approximately $39.5 million of NOL will expire from 2023 through 2037, and approximately $81.1 million of NOL will be carried forward indefinitely. The NOL carryforwards are subject to an annual limitation in the event of certain cumulative changes in the ownership interest. This limited the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. Subsequent ownership changes may further affect the limitation in future years. 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. A reconciliation of the beginning and ending balances of uncertain tax positions in the years ended December 31, 2021 and 2020 is as follows:
(In thousands) |  | 2021 |  |  | 2020 |
Balance as of January 1 |  | $ | 96 |  |  | $ | - |
Increase related to prior year tax positions |  |  | - |  |  |  | 36 |
Increase related to current year tax positions |  |  | 159 |  |  |  | 60 |
Balance as of December 31 |  | $ | 255 |  |  | $ | 96 |
The Company did not have any uncertain tax positions or changes in uncertain tax positions as of or in the year ended December 31, 2019. 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, which includes 2003 through 2021.

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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=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 http://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 http://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 http://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 http://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 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 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 http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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