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Note 10 - Income Taxes | 12 Months Ended
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Dec. 31, 2022
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | Note 10 – Income Taxes The expense/(benefit) for income taxes for the years ended December 31 includes the following (in thousands):
|  | 2022 |  |  | 2021 |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | 1 |  |  | $ | 15 |
State |  |  | 3 |  |  |  | 13 |
Total current tax provision |  |  | 4 |  |  |  | 28 |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | - |  |  |  | - |
State |  |  | - |  |  |  | - |
Total deferred tax provision |  |  | - |  |  |  | - |
Income tax expense |  | $ | 4 |  |  | $ | 28 |
The reconciliation of the federal statutory income tax rate to our effective tax rate for the years ended December 31 is as follows (in thousands):
|  | 2022 |  |  | 2021 |
Expected provision at federal statutory tax rate at 21% |  | $ | (46 | ) |  | $ | 1,003 |
PPP loan forgiveness |  |  | - |  |  |  | (513 | )
Decrease in valuation allowance |  |  | (33 | ) |  |  | (346 | )
State and local taxes |  |  | 84 |  |  |  | 6 |
Foreign tax rate differential |  |  | 4 |  |  |  | (116 | )
US taxation of foreign operations |  |  | 80 |  |  |  | - |
Federal research and development credits |  |  | (55 | ) |  |  | (57 | )
Change in tax rates |  |  | 10 |  |  |  | - |
Non-deductible expenses |  |  | 62 |  |  |  | 51 |
Other |  |  | (102 | ) |  |  | - |
Income tax expense |  | $ | 4 |  |  | $ | 28 |
The tax effects of temporary differences giving rise to significant portions of the net deferred taxes as of December 31 are as follows (in thousands):
|  | 2022 |  |  | 2021 |
Deferred income tax assets: |  |  |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 482 |  |  | $ | 808 |
R&D tax credit carryforwards |  |  | 1,723 |  |  |  | 1,672 |
Impairment charges |  |  | - |  |  |  | 723 |
Compensation costs |  |  | 10 |  |  |  | 149 |
Vacation accrual |  |  | 174 |  |  |  | 141 |
Intangible assets |  |  | 27 |  |  |  | - |
Capitalized research and development |  |  | 356 |  |  |  | - |
Other items |  |  | 263 |  |  |  | 114 |
Deferred income tax assets |  |  | 3,035 |  |  |  | 3,607 |
Less: valuation allowance |  |  | (2,957 | ) |  |  | (2,990 | )
Deferred income tax assets, net of valuation allowance |  |  | 78 |  |  |  | 617 |
Deferred incomes tax liability: |  |  |  |  |  |  |  |
Property, plant and equipment |  |  | (11 | ) |  |  | (617 | )
Prepaid expenses |  |  | (67 | ) |  |  | - |
Deferred income tax asset, net |  | $ | - |  |  | $ | - |
In assessing the Company’s ability to recover its deferred tax assets, the Company evaluated whether it is more likely than not that some portion or the entire deferred tax asset will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those periods in which temporary differences become deductible and/or net operating losses can be utilized. The Company considered all positive and negative evidence when determining the amount of the net deferred tax assets that are more likely than not to be realized. This evidence includes, but is not limited to, historical earnings, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable income. A significant piece of objective negative evidence evaluated was cumulative loss incurred over the three-year period ended December 31, 2022. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. Based on the weight of available evidence, the Company determined that its U.S. deferred tax assets are not realizable on a more-likely-than-not basis and has recorded a valuation allowance against its net U.S. deferred tax assets. The Company’s valuation allowance decreased by $33,000 during 2022. The Company will continue to evaluate its deferred tax assets to determine whether any changes in circumstances could affect the realization of their future benefit. If it is determined in future periods that portions of the Company’s deferred income tax assets satisfy the realization standards, the valuation allowance will be reduced accordingly. At December 31, 2022, the Company had $1.4 million of U.S. federal net operating loss carryforwards. These net operating losses have an indefinite carryforward period but are only available to offset 80% of future taxable income. The Company also has $1.7 million of federal research and development tax credits which expire in varying amounts in tax years 2028 through 2042. The Company has Denmark net operating losses of $0.7 million which have an indefinite carryforward period. In connection with the CARES Act, the Company was able to carryback net operating losses generated in 2020 to its 2018 tax year. As of December 31, 2021, the Company has an income tax receivable of $0.7M which was received during the year ended December 31, 2022. The Company applies the applicable authoritative guidance which prescribes a comprehensive model for the manner in which a company should recognize, measure, present and disclose in its financial statements all material uncertain tax positions that the Company has taken or expects to take on a tax return. As of December 31, 2022 and 2021, the Company had no uncertain tax positions. The Company does not expect that its unrecognized tax benefits will significantly increase or decrease within twelve months. The Company files federal income tax returns and income tax returns in various state and local tax jurisdictions and in Denmark. The federal tax years open to examination are 2019 to 2022. The Company's state and local tax years that are open to tax examination are generally 2018 to 2022. The Inflation Reduction Act (“IRA”) and Chips and Science Act (“CHIPS Act”) were both enacted in August 2022. The IRA introduced new provisions including a 15% corporate alternative minimum tax for certain large corporations that have at least an average of $1 billion adjusted financial statement income over a consecutive three-tax-year period and a 1% excise tax surcharge on stock repurchases. The CHIPS Act provides a variety of incentives associated with investments in domestic semiconductor manufacturing and related activities. Both the IRA and CHIPS Act are applicable for tax years beginning after December 31, 2022 and had no impact to the Company’s consolidated financial statements for the year ended December 31, 2022.

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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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