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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] | NOTE 8. INCOME TAXES In December 2020, the Consolidated Appropriations Act, 2021 (“CAA”) was signed into law. The CAA included additional funding through tax credits as part of its economic package for 2021. We evaluated these items in its tax computation as of December 31, 2020 and determined that the items do not have a material impact on our financial statements as of December 31, 2020. Additionally, as part of the Paycheck Protection Program (“PPP”) established by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), we received a PPP loan on April 15, 2020. The full amount of the loan and accrued interest were forgiven on November 3, 2021. This extinguishment of debt income is recorded in other income (expense) on the consolidated statements of operations and other comprehensive income for the year ended December 31, 2021. The PPP loan forgiveness will be treated as tax-exempt income due to the provisions in the CAA. The income tax expense for the years ended December 31, 2021 and 2020 consists of the following:
|  | 2021 |  |  | 2020 |
Current taxes - Federal |  | $ | 401 |  |  | $ | 121 |
Current taxes - State |  |  | 17 |  |  |  | 24 |
Current taxes - Foreign |  |  | 441 |  |  |  | 165 |
Income tax expense |  | $ | 859 |  |  | $ | 310 |
The statutory rate reconciliation for the years ended December 31, 2021 and 2020 is as follows:
|  | 2021 |  |  | 2020 |
Statutory Rate |  | $ | 1,606 |  |  | $ | (259 | )
State Income Tax |  |  | 14 |  |  |  | 60 |
Effect of foreign operations |  |  | 110 |  |  |  | (18 | )
Change in State Deferred Rate |  |  | (39 | ) |  |  | (115 | )
Valuation Allowance |  |  | 472 |  |  |  | 101 |
PPP Loan Forgiveness |  |  | (1,276 | ) |  |  | - |
US Permanent differences |  |  | 3 |  |  |  | 5 |
Federal Tax Credits |  |  | (37 | ) |  |  | (108 | )
Global Intangible Low-Taxed Income Effect |  |  | 391 |  |  |  | 125 |
Return to provision - credits, perm diffs |  |  | (481 | ) |  |  | 4 |
Goodwill Impairment |  |  | - |  |  |  | 499 |
IRS Payable |  |  | 121 |  |  |  | - |
Other |  |  | (25 | ) |  |  | 16 |
|  | $ | 859 |  |  | $ | 310 |
Income and loss from operations before income taxes was derived from the following sources:
|  | 2021 |  |  | 2020 |
Domestic |  | $ | 6,072 |  |  | $ | (2,109 | )
Foreign |  |  | 1,941 |  |  |  | 873 |
|  | $ | 8,013 |  |  | $ | (1,236 | )
Deferred tax (liabilities) assets at December 31, 2021 and 2020, consist of the following:
|  | 2021 |  |  | 2020 |
Deferred Tax |  |  |  |  |  |  |  |
Allowance for uncollectable accounts |  | $ | 80 |  |  | $ | 85 |
Inventories reserve |  |  | 303 |  |  |  | 531 |
Accrued vacation |  |  | 135 |  |  |  | 115 |
Accrued bonus |  |  | 274 |  |  |  | 57 |
Stock-based compensation and equity appreciation rights |  |  | 135 |  |  |  | 78 |
Other Accruals |  |  | 547 |  |  |  | - |
Lease Accounting ASC 842 Lease Liability |  |  | 1,555 |  |  |  | 1,405 |
Section 481(a) adjustment |  |  | - |  |  |  | 798 |
Net operating loss carryforwards |  |  | 101 |  |  |  | 82 |
Tax credit carryforwards |  |  | 162 |  |  |  | 165 |
Unrealized Foreign Currency Gain |  |  | 22 |  |  |  | 42 |
Intangibles |  |  | 569 |  |  |  | - |
COGS Rev Rec Adjustment |  |  | 1,776 |  |  |  | - |
COGS Offset Adjustment |  |  | (1,807 | ) |  |  | - |
Other |  |  | 10 |  |  |  | 5 |
Total |  |  | 3,862 |  |  |  | 3,363 |
Valuation allowance |  |  | (1,976 | ) |  |  | (1,504 | )
Deferred tax assets |  |  | 1,886 |  |  |  | 1,859 |
Accumulated Other Comprehensive Income |  |  | (297 | ) |  |  | (61 | )
Lease Accounting ASC 842 Lease Asset |  |  | (1,518 | ) |  |  | (1,386 | )
Property and equipment |  |  | (71 | ) |  |  | (412 | )
Deferred tax liabilities |  |  | (1,886 | ) |  |  | (1,859 | )
Net deferred tax assets |  | $ | - |  |  | $ | - |
We currently have significant deferred tax assets as a result of temporary differences between taxable income on our tax returns and U.S. GAAP income, research and development tax credit carry forwards and state net operating loss carry forwards. A deferred tax asset generally represents future tax benefits to be received when temporary differences previously reported in our financial statements become deductible for income tax purposes, or when net operating loss carry forwards are applied against future taxable income, or when tax credit carry forwards are utilized on our tax returns. We assess the realizability of our deferred tax assets and the need for a valuation allowance based on the guidance provided in current financial accounting standards. Significant judgment is required in determining the realizability of our deferred tax assets. The assessment of whether valuation allowances are required considers, among other matters, the nature, frequency and severity of any current and cumulative losses, forecasts of future profitability, the duration of statutory carry forward periods, our experience with loss carry forwards not expiring unused and tax planning alternatives. We have concluded that a valuation allowance is needed for all our United States based deferred tax assets due to the cumulative net losses we have sustained in the past three years. In analyzing the need for a valuation allowance, we considered our history of operating results for income tax purposes over the past three years in each of the tax jurisdictions where we operate, statutory carry forward periods and tax planning alternatives. Finally, we considered both our near and long-term financial outlook and timing regarding when we might return to profitability. After considering all available evidence both positive and negative, we concluded that the valuation allowance is needed for all our U.S. based deferred tax assets, no valuation allowance was placed on the foreign assets. At December 31, 2021, for U.S. state tax purposes, we have Minnesota R&D credit carryforwards of $181 and various state net operating loss carryforwards of $296 for Iowa, $679 for Minnesota, $45 for Wisconsin. The state credits and NOLs expire at various years starting in 2024. The tax effects from uncertain tax positions can be recognized in our consolidated financial statements, only if the position is more likely than not to be sustained on audit, based on the technical merits of the position. We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The following table sets forth changes in our total gross unrecognized tax benefit liabilities, excluding accrued interest, for the years ended December 31, 2021 and 2020 (in thousands):
Balance at December 31, 2020 |  | $ | 50 |
Tax Positions - Additions |  |  | - |
Tax Positions - Reductions |  |  | - |
Balance at December 31, 2021 |  | $ | 50 |
Our policy is to accrue interest related to potential underpayment of income taxes within the provision for income taxes. The liability for accrued interest as of December 31, 2021 and 2020 was not significant. Interest is computed on the difference between our uncertain tax benefit positions and the amount deducted or expected to be deducted in our tax returns. We are subject to income taxes in the U.S. federal jurisdiction and various state jurisdictions. The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. As of December 31, 2021, with few exceptions, the Company or its subsidiaries are no longer subject to examination prior to tax year 2017. Our tax year 2018 income tax return is currently under IRS audit.

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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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