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Note 7 - Income Taxes | 12 Months Ended
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Dec. 31, 2021
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | Note 7 – Income Taxes Income taxes are recognized for the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets are established for the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns. The effects of income taxes are measured based on enacted tax laws and rates. The provision for income taxes from continuing operations consists of the following (in $’000):
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | - |  |  | $ | - |
State |  |  | 65 |  |  |  | 50 |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | - |  |  |  | - |
State |  |  | - |  |  |  | - |
Total provision for income taxes before valuation allowance |  | $ | 65 |  |  | $ | 50 |
Change in valuation allowance |  |  | - |  |  |  | - |
Total provision for income taxes |  | $ | 65 |  |  | $ | 50 |
The significant components of our deferred tax assets and liabilities are as follows (in $’000):
|  | December 31, |
|  | 2021 |  |  | 2020 |
Deferred tax assets: |  |  |  |  |  |  |  |
Accrued expenses |  | $ | 31 |  |  | $ | 32 |
Net operating loss carryover |  |  | 9,317 |  |  |  | 8,760 |
Goodwill and other intangibles |  |  | 74 |  |  |  | 439 |
Deferred compensation |  |  | 57 |  |  |  | 122 |
Depreciation |  |  | 112 |  |  |  | 64 |
Deferred revenue |  |  | 22 |  |  |  | 25 |
Lease liability |  |  | 1,222 |  |  |  | 205 |
Interest expense |  |  | 88 |  |  |  | - |
Other carryovers and credits |  |  | 2 |  |  |  | 2 |
Total deferred tax assets |  |  | 10,925 |  |  |  | 9,649 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Prepaid expenses |  | $ | (9 | ) |  | $ | (7 | )
Right-of-use asset |  |  | (1,219 | ) |  |  | (189 | )
Total deferred tax liabilities |  |  | (1,228 | ) |  |  | (196 | )
Valuation Allowance |  |  | (9,697 | ) |  |  | (9,453 | )
Net deferred tax asset (liability) |  | $ | - |  |  | $ | - |
At December 31, 2021 and 2020, we had net operating losses (“NOL”) of approximately $42.1 million and $39.6 million, respectively, to offset future taxable income. A portion of the Company’s NOL will begin to expire in 2028. Utilization of the net operating loss and credit carryforwards may be subject to a substantial annual limitation due to the “change in ownership” provisions of the Internal Revenue Code of 1986. The annual limitation may result in the expiration of net operating losses and credit carryforwards before utilization. Our provision for income taxes reflects the establishment of a full valuation allowance against deferred tax assets as of December 31, 2021, and 2020. Accounting Standards Codification Topic 740 Income Taxes requires management to evaluate its deferred tax assets on a regular basis to reduce them to an amount that is realizable on a more likely than not basis. During 2021, the valuation allowance increased by approximately $244 thousand due to continuing operations. In determining our provision/(benefit) for income taxes, net deferred tax assets, liabilities and valuation allowances, we are required to make judgments and estimates related to projections of profitability, the timing and extent of the utilization of net operating loss carryforwards and applicable tax rates. Judgments and estimates related to our projections and assumptions are inherently uncertain; therefore, actual results could differ materially from the projections. We have adopted the provisions of the guidance related to accounting for uncertainties in income taxes. We have analyzed our current tax reporting compliance positions for all open years and have determined that it does not have any material unrecognized tax benefits. Accordingly, we have omitted the tabular reconciliation schedule of unrecognized tax benefits. We do not expect a material change in unrecognized tax benefits over the next 12 months. All of our prior federal and state tax filings from the 2018 tax year forward remain open under statutes of limitation. Operating losses generated in years prior to 2018 remain open to adjustment until the statute closes for the tax year in which the net operating losses are utilized. The Company’s provision for income taxes attributable to continuing operations differs from the expected tax benefit amount computed by applying the statutory federal income tax rate of 21% to income before taxes for the years ended December 31, 2021 and 2020 primarily as a result of the following:
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |
Federal statutory rate |  |  | 21.0 | % |  |  | 21.0 | %
State tax, net of income tax benefit |  |  | (2.6 | )% |  |  | 26.7 | %
Effect of permanent differences |  |  | 0.8 | % |  |  | (130.9 | )%
Stock compensation |  |  | (3.8 | )% |  |  | (48.9 | )%
Change in valuation allowance |  |  | (19.9 | )% |  |  | 170.7 | %
Total |  |  | (4.5 | )% |  |  | 38.6 | %

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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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