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Note 18 - Income Taxes | 12 Months Ended
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Nov. 30, 2022
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
18. | INCOME TAXES
Loss before income taxes consists of the following (in thousands):
|  | Year Ended November 30, |
|  | 2022 |  |  | 2021 |
United States |  | $ | (8,185 | ) |  | $ | (2,911 | )
Foreign |  |  | 534 |  |  |  | (532 | )
Total |  | $ | (7,651 | ) |  | $ | (3,443 | )
The components of the provision (benefit) for income taxes is as follows (in thousands):
|  | Year Ended November 30, |
|  | 2022 |  |  | 2021 |
Current expense (benefit): |  |  |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |
State |  |  | 83 |  |  |  | 14 |
Foreign |  |  | 271 |  |  |  | (165 | )
Total current expense (benefit): |  |  | 354 |  |  |  | (151 | )
Deferred expense (benefit): |  |  |  |  |  |  |  |
Federal |  |  | 3 |  |  |  | — |
State |  |  | 1 |  |  |  | — |
Foreign |  |  | (124 | ) |  |  | (9 | )
Total deferred expense (benefit) |  |  | (120 | ) |  |  | (9 | )
Total income tax provision (benefit) |  | $ | 234 |  |  | $ | (160 | )
A reconciliation of the Company’s statutory income tax rate to the Company’s effective income tax rate is as follows:
|  | Year Ended November 30, |
|  | 2022 |  |  | 2021 |
Income at US statutory rate |  |  | 21.00 | % |  |  | 21.00 | %
State income taxes |  |  | (1.20 | )% |  |  | (0.31 | )%
Permanent differences |  |  | (2.79 | )% |  |  | (0.34 | )%
Foreign rate differential |  |  | (0.49 | )% |  |  | 1.82 | %
Valuation allowance |  |  | (16.96 | )% |  |  | (9.05 | )%
Other |  |  | (2.62 | )% |  |  | (8.52 | )%
Total |  |  | (3.06 | )% |  |  | 4.60 | %
The net deferred income tax asset balance related to the following (in thousands):
|  | November 30, |
|  | 2022 |  |  | 2021 |
Net operating loss carryforwards |  | $ | 6,515 |  |  | $ | 5,226 |
Stock compensation |  |  | 1,192 |  |  |  | 1,103 |
Inventory reserve |  |  | 169 |  |  |  | 95 |
Bad debt reserve |  |  | — |  |  |  | 3 |
Accrued payroll |  |  | 411 |  |  |  | 363 |
Warranty reserve |  |  | 174 |  |  |  | 160 |
Foreign tax credit carryforwards |  |  | 9 |  |  |  | 9 |
Unrealized losses |  |  | 18 |  |  |  | 4 |
Deferred revenue |  |  | 35 |  |  |  | — |
Lease liability |  |  | 507 |  |  |  | — |
Subtotal deferred tax assets |  |  | 9,031 |  |  |  | 6,963 |
Valuation allowance |  |  | (7,839 | ) |  |  | (6,551 | )
Total deferred tax assets |  |  | 1,192 |  |  |  | 412 |
Depreciation and amortization |  |  | 554 |  |  |  | 412 |
Right of use asset |  |  | 509 |  |  |  | — |
Total deferred tax liabilities |  |  | 1,063 |  |  |  | 412 |
Net deferred tax assets |  | $ | 129 |  |  | $ | — |
The Company notes $0.03 million of a United States state refundable tax credit awarded in the year has been booked above the income tax line in accordance with US GAAP principles. As of November 30, 2022, the Company had federal and state NOL carryforwards of approximately $28.8 million and $7.8 million, respectively, which begin to expire in 2025 for federal and state purposes. The federal NOL carryforwards include approximately $13.2 million, which do not expire. Deferred tax assets are presented in other assets in the accompanying Consolidated Balance Sheets. Future realization of the tax benefits of existing temporary differences and NOL carryforwards ultimately depends on the existence of sufficient taxable income within the carryforward period. As of November 30, 2022 and 2021, respectively, the Company performed an evaluation to determine whether a valuation allowance was needed. The Company considered all available evidence, both positive and negative, which included the results of operations for the current and preceding years. The Company determined that it was not possible to reasonably quantify future taxable income and determined that it is more likely than not that all of the United States entity's deferred tax assets will not be realized. Accordingly, the Company maintained a full valuation allowance as of November 30, 2022 and 2021. Additionally, a deferred tax liability has been established in the United States entity during the year relating to tax basis in excess of book basis on an indefinite lived intangible. At November 30, 2022 and 2021, the Company recognized valuation allowances of $7.8 million and $6.6 million, respectively, related to its deferred tax assets created in those respective years. The net increase of $1.2 million and $0.3 million in the valuation allowance reflects the net increase in gross deferred tax asset between November 30, 2022 and 2021 and the prior fiscal years, respectively. Pursuant to Internal Revenue Code Section 382, use of NOL carryforwards may be limited if the Company experiences a cumulative change in ownership of greater than 50% in a moving three-year period. Ownership changes could impact the Company’s ability to utilize the NOL carryforwards remaining at an ownership change date. The Company last completed a Section 382 analysis regarding whether an ownership change had occurred for Company through November 30, 2021. Based on the analysis, the cumulative ownership change is 17.08%. The resulting limitation of NOL carryforwards has been considered in determining the full valuation allowance against the related deferred tax assets as noted above.

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