XML 36 R21.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Note 13 - Income Tax | 12 Months Ended
--- | ---
Dec. 31, 2021
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
| 13. | Income Tax
Income tax expense for years ended December 31, 2021 and 2020 consisted of:
|  | Year Ended December 31, |
(in thousands) |  | 2021 |  |  | 2020 |
Current income tax expense: |  |  |  |  |  |  |  |
Federal and state |  | $ | 363 |  |  | $ | 169 |
Foreign |  |  | 156 |  |  |  | 492 |
|  |  | 519 |  |  |  | 661 |
Deferred income tax (benefit) expense: |  |  |  |  |  |  |  |
Federal and state |  |  | 22 |  |  |  | 245 |
Foreign |  |  | (393 | ) |  |  | (388 | )
|  |  | (371 | ) |  |  | (143 | )
Total income tax expense |  | $ | 148 |  |  | $ | 518 |
The effective tax rate for the year ended December 31, 2021 was (105.7)% as compared with (7.1)% for the same period in 2020. The difference between the Company’s effective tax rate year over year was primarily attributable to changes in the mix of pre-tax income and losses at individual subsidiaries as well as the impact of different tax rates in certain foreign jurisdictions, and the impact of the change in valuation allowance. Income tax expense for the years ended December 31, 2021 and 2020 differed from the amount computed by applying the U.S. federal income tax rate of 21% to pre-tax operations income as a result of the following:
|  | Year Ended December 31, |
(in thousands) |  | 2021 |  |  | 2020 |
Provision for income taxes at federal statutory rates |  | $ | (29 | ) |  | $ | (1,531 | )
Increase (decrease) in income taxes resulting from: |  |  |  |  |  |  |  |
Permanent differences, net |  |  | (78 | ) |  |  | 141 |
Foreign tax rate differential |  |  | (217 | ) |  |  | (14 | )
State income taxes, net of federal income tax benefit |  |  | (16 | ) |  |  | (77 | )
Non-deductible stock compensation expense |  |  | 408 |  |  |  | 94 |
Tax credits |  |  | 455 |  |  |  | (192 | )
Change in reserve for uncertain tax position |  |  | (118 | ) |  |  | 259 |
Impact of change to prior year tax accruals |  |  | 464 |  |  |  | 168 |
Change in valuation allowance allocated to income tax |  |  | (961 | ) |  |  | 2,130 |
Other |  |  | 240 |  |  |  | (460 | )
Total income tax expense |  | $ | 148 |  |  | $ | 518 |
Income tax expense is based on the following pre-tax income (loss) from operations:
|  | Year Ended December 31, |
(in thousands) |  | 2021 |  |  | 2020 |
Domestic |  | $ | 2,364 |  |  | $ | (7,954 | )
Foreign |  |  | (2,504 | ) |  |  | 662 |
Total |  | $ | (140 | ) |  | $ | (7,292 | )
The tax effects of temporary differences that give rise to significant components of the deferred tax assets and deferred tax liabilities at December 31, 2021 and 2020 are as follows:
|  | Year Ended December 31, |
(in thousands) |  | 2021 |  |  | 2020 |
Deferred income tax assets: |  |  |  |  |  |  |  |
Inventory |  | $ | 1,280 |  |  | $ | 1,144 |
Operating loss and credit carryforwards |  |  | 18,046 |  |  |  | 19,220 |
Accrued expenses |  |  | 835 |  |  |  | 555 |
Deferred interest expense |  |  | 1,191 |  |  |  | 1,476 |
Stock compensation |  |  | 580 |  |  |  | 1,079 |
Lease liability |  |  | 1,693 |  |  |  | 1,823 |
Other assets |  |  | 386 |  |  |  | 458 |
Total gross deferred assets |  |  | 24,011 |  |  |  | 25,755 |
Less: valuation allowance |  |  | (14,700 | ) |  |  | (16,682 | )
Deferred tax assets |  | $ | 9,311 |  |  | $ | 9,073 |
Deferred income tax liabilities: |  |  |  |  |  |  |  |
Indefinite-lived intangible assets |  | $ | 1,882 |  |  | $ | 1,822 |
Definite-lived intangible assets |  |  | 6,277 |  |  |  | 7,493 |
Right-of-use asset |  |  | 1,277 |  |  |  | 1,388 |
Other liabilities |  |  | 1,228 |  |  |  | 14 |
Total deferred tax liabilities |  |  | 10,664 |  |  |  | 10,717 |
Deferred income tax liability, net |  | $ | (1,353 | ) |  | $ | (1,644 | )
Deferred income tax assets and liabilities by classification on the consolidated balance sheets were as follows:
|  | Year Ended December 31, |
(in thousands) |  | 2021 |  |  | 2020 |
Deferred income tax assets (included in other long-term assets) |  | $ | 205 |  |  | $ | 255 |
Deferred income tax liabilities |  |  | (1,558 | ) |  |  | (1,899 | )
Deferred income tax liability, net |  | $ | (1,353 | ) |  | $ | (1,644 | )
As of December 31, 2021 and 2020, the Company maintained a total valuation allowance of $14.7 million and $16.7 million, respectively, which relates to foreign, federal, and state deferred tax assets in both years. The valuation allowance is based on estimates of taxable income in each of the jurisdictions in which the Company operates and the period over which deferred tax assets will be recoverable. The net change in total valuation allowance for each of the years ended December 31, 2021 and December 31, 2020 was a decrease of $2.0 million and an increase of $2.9 million, respectively. The decrease in the valuation allowance in 2021 is primarily due to a change in estimate of the realizability of UK deferred tax assets and the utilization and expiration of certain U.S. net operating losses and the expiration of certain U.S. credits. A valuation allowance decrease of $0.9 million was recorded to equity during the year ended December 31, 2021 related to the UK pension liability. The movement in the valuation allowance in 2020 is primarily due to increases in the valuation allowance against net operating losses (NOLs) as a result of changes made by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and movement of $0.7 million was recorded to equity during the year ended December 31, 2020 related to the UK pension asset. At December 31, 2021, the Company had U.S. federal net operating loss carryforwards of $22.7 million, of which $22.6 expires between 2029 and 2037. The Company’s state net operating loss carryforwards of $16.4 million expire between 2022 and 2041. The Company has net operating loss carryforwards of $9.9 million in certain foreign jurisdictions which may be carried forward indefinitely, partially offset by valuation allowances. The Company has $8.4 million of research and development tax credit carryforwards and foreign tax credits of $0.2 million which begin to expire in 2022. Approximately $1.0 million of the research and development tax credit carryforwards are offset by a reserve for uncertain tax positions. In addition, the Company had a total of $2.9 million of state investment tax credit carryforwards, research and development tax credit carryforwards, and enterprise zone credit carryforwards, which begin to expire in 2023. The Internal Revenue Code (IRC) limits the amounts of net operating loss carryforwards or credits that a company may use in any one year in the event of a change in ownership under IRC Sections 382 or 383. As a result of the DSI acquisition as well as other acquisitions in prior years, certain losses and credit carryforwards are subject to these limitations. The Company has provided a full or partial valuation allowance for the portion of state NOLs and federal and state credit carryforwards the Company expects will expire before use. As of December 31, 2021 and December 31, 2020, cash and cash equivalents held by the Company’s foreign subsidiaries was $2.8 million and $2.5 million, respectively. As of December 31, 2021, the Company has determined the potential income tax and withholding liability related to available cash balances at foreign subsidiaries to be immaterial. At December 31, 2021 and 2020 the amount of unrecognized tax benefits that would affect the Company’s effective tax rate are shown in the table below:
(in thousands) |  |  |
Balance at December 31, 2019 |  | $ | 1,353 |
Additions based on tax positions of prior years |  |  | 157 |
Decreases based on tax positions of prior years |  |  | (11 | )
Additions based on tax positions of current years |  |  | 213 |
Settlements and other |  |  | (39 | )
Balance at December 31, 2020 |  |  | 1,673 |
Additions based on tax positions of prior years |  |  | - |
Decreases based on tax positions of prior years |  |  | (208 | )
Additions based on tax positions of current years |  |  | 176 |
Decreases based on expiration of statutes of limitation |  |  | (42 | )
Settlements and other |  |  | (267 | )
Balance at December 31, 2021 |  | $ | 1,332 |
The Company does not anticipate that any portion of the total unrecognized tax benefits will be reduced within the next 12 months. The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is $1.3 million. The Company classifies interest and penalties related to unrecognized tax benefits as a component of income tax expense, which has not been significant during the years ended December 31, 2021 and 2020, respectively. The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to income tax examinations by tax authorities in foreign jurisdictions for years before 2017. In the U.S., the Company's net operating loss and tax credit carryforward amounts remain subject to federal and state examination for tax years starting in 2002 as a result of tax losses incurred in prior years. There are currently no pending federal or state tax examinations. On March 27, 2020, the CARES Act was signed into law. Under the CARES Act, the limitation on the deduction of business interest under Section 163j of the Internal Revenue Code was increased to 50% of adjusted taxable income (from 30%) for taxable years beginning in 2019 or 2020. In addition, the CARES Act corrected the Tax Cuts and Jobs Act to provide that net operating losses with unlimited carryover period are those arising in tax years beginning after December 31, 2017, rather than in tax years ending after that date. This change impacted $5.3 million of NOLs from the DSI acquisition in 2018, which no longer have an unlimited carryforward period. As a result, the Company increased the valuation allowance against these NOLs by $1.1 million.

X
- References No definition available. + Details
Name: | us-gaap_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration