Note 12 - Income Taxes

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Income Tax Disclosure [Text Block]

12. INCOME TAXES

The components for income tax expense included in the accompanying Consolidated Statements of Operations for the years ended December 31, 2024 and 2023 are as follows (in thousands):

	December 31, 2024		December 31, 2023
Current state income tax expense	$	313	$	118
Current foreign income tax expense		172		126
Deferred federal income tax expense		—		—
Income tax expense	$	485	$	244

A reconciliation of income taxes computed using the 21% U.S. federal statutory rate to the amount reflected in the accompanying consolidated statement of operations within net income for the years ended December 31, 2024 and 2023 is as follows (in thousands):

	December 31, 2024			December 31, 2023
Income tax benefit using U.S. federal statutory rate	$	1,068		$	77
State income tax expense		253			26
Foreign income tax expense		172			123
Foreign tax rate difference		70			263
Non-deductible expenses		294			65
Change in valuation allowance		(1,511	)		(367	)
Other		139			57
Total income tax expense	$	485		$	244

The effects of temporary differences and carryforwards that give rise to deferred tax assets (liabilities) are as follows (in thousands):

	December 31, 2024			December 31, 2023
Federal net operating loss carryforward	$	11,163		$	11,737
Stock compensation		337			684
Accrued compensation		57			86
Basis of intangible assets		132			147
Capital loss carryforward		1,631			1,719
Other		5			—
Valuation allowance		(7,896	)		(9,407	)
Total deferred tax assets		5,429			4,966
Basis of property, plant and equipment		3,189			3,636
Prepaid expenses		219			212
Basis in foreign entity		2,021			1,118
Other		—			—
Total deferred tax liabilities		5,429			4,966
Net deferred tax liabilities	$	—		$	—

At December 31, 2024, the Company has net operating loss carry forwards of approximately $53.2 million which may be used to offset future taxable income. This excludes net operating loss carry forwards of $81.1 million it believes will not be eligible to offset future income. The $82.4 million is excluded from the Company's calculation of deferred tax assets prior to the establishment of a valuation allowance. The Company experienced a change in ownership significantly limiting its recognition of  net operating loss carryforwards of an acquired subsidiary at July 26, 2019 due to its change in ownership.

The Company’s net operating loss carryforwards include $30.2 million of losses arising prior to December 31, 2017 that expire in 2028 through 2037. Those arising in tax years after 2017 can be carried forward indefinitely. Also, for losses arising in taxable years beginning after December 31, 2017 the operating loss deduction is limited to 80% of taxable income (determined without regard to the deduction). The Company has established a valuation allowance to fully reserve the Company's net deferred tax assets at December 31, 2024 based upon its assessment of whether it is more likely than not that the Company will realize its deferred tax assets which includes consideration of the nature and amount of the Company's net losses arising from prior periods. The Company has generated net income from operations for the years ended December 31, 2024 and 2023 and the Company's assessment of the amount of valuation allowance needed could change in future periods. 

The Company recognizes the tax benefit or obligation from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based not only on the technical merits of the tax position based on tax law, but also past administrative practices and precedents of the taxing authority. The tax benefits or obligations are recognized in our financial statements if there is a greater than 50% likelihood of the tax benefit or obligation being realized upon ultimate resolution. As of   December 31, 2024 and 2023, the Company had no uncertain tax positions that required recognition.

As of December 31, 2024, the Company's federal income tax return for the year ended December 31, 2022 was under examination by the Internal Revenue Service (IRS). The Company does not anticipate any additional amounts to be owed as a result of this examination. Tax returns for years 2020 to 2023 remain subject to examination for both federal and state filings.