Note 8 - Income Taxes

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Income Tax Disclosure [Text Block]

8. Income Taxes

Pre-tax loss consisted of the following (in thousands):  

	Year Ended December 31,
	2020			2019
U.S.	$	(851	)	$	(8,225	)
Foreign		(1,038	)		(940	)
Total	$	(1,889	)	$	(9,165	)

Income tax expense consisted of the following (in thousands):

	Year Ended December 31,
	2020		2019
Current taxes:
Federal	$	-	$	-
State and local		-		16
Foreign		-		-
Current taxes		-		16
Deferred taxes:
Federal		-		-
State and local		-		-
Foreign		-		-
Deferred taxes		-		-
Total	$	-	$	16

Net deferred tax assets and liabilities consisted of the following (in thousands):  

	December 31,
	2020			2019
Deferred tax assets:
Net operating loss carryforwards	$	18,141		$	18,677
Research and development credit carryforwards		3,058			3,576
Share-based compensation		449			645
Accrued expenses and reserves		137			127
Depreciation and amortization		38			17
Deferred revenue		253			275
Right of use liability		357			301
Other		23			14
Gross deferred tax assets		22,456			23,632
Less: valuation allowance		(22,121	)		(23,324	)
Net deferred tax assets		335			308
Deferred tax liabilities:
Right of use asset		(328	)		(301	)
Net deferred tax assets	$	7		$	7

Net deferred tax assets and liabilities were recorded as follows (in thousands):  

	December 31,
	2020		2019
Deferred tax assets, non-current	$	7	$	7
Deferred tax liability, non-current		-		-
Net deferred tax assets	$	7	$	7

As of

December 31, 2020

, our deferred tax assets were primarily the result of U.S. net operating loss, research and development credit carryforwards and share-based compensation expense. We have applied a full valuation allowance against the U.S. deferred tax assets in the U.S. and foreign jurisdictions.

We use judgment as to the appropriate weighting of all available evidence when assessing the need for the establishment or the release of valuation allowances. As part of this analysis, we examine all available evidence on a jurisdiction-by-jurisdiction basis and weigh the positive and negative information when determining the need for full or partial valuation allowances. The evidence considered for each jurisdiction includes, among other items, (i) the historical levels of income or loss over a range of time periods that extends beyond the

two

years presented, (ii) the historical sources of income and losses, (iii) the expectations and risk associated with underlying estimates of future taxable income, (iv) the expectations and risk associated with new product offerings and uncertainties with the timing of future taxable income, and (v) prudent and feasible tax planning strategies. Based on the analysis conducted as of

December 31, 2020

, we determined that we would maintain a full valuation allowance against our U.S. gross deferred tax assets.

The provision for income taxes differed from the amount of expected income tax expense determined by applying the applicable U.S. statutory federal income tax rate to pre-tax loss as follows (in thousands, except percentages):  

	Year Ended December 31,
	2020					2019
U.S. Federal tax benefit at statutory rates	$	(397	)	21.0	%	$	(1,925	)	21.0	%
Impact of:
Tax credits		109		(5.8	)		(715	)	7.8
State income tax		(53	)	2.8			(108	)	1.2
International operations		(6	)	0.3			409		(4.5	)
Share-based compensation		317		(16.8	)		348		(3.8	)
Valuation allowance		(1,224	)	64.8			1,471		(16.0	)
Expiration of tax attributes		1,330		(70.4	)		475		(5.2	)
Other, net		(76	)	4.0			61		(0.7	)
Tax expense and effective tax rate	$	—		0.0	%	$	16		(0.2	)%

At

December 31, 2020

, we had approximately

$80.3

million of federal and

$11.1

million of state net operating loss carryforwards, which have begun to expire. Of the federal net operating loss carryforwards, approximately

$62.7

million will expire by

2037

and

$17.6

million are indefinite. We also have approximately

$3.1

million of tax credit carryforwards, which have begun to expire. Use of these carryforwards

may

subject us to an annual limitation due to Section 

382

of the U.S. Internal Revenue Code that restricts the ability of a corporation that undergoes an ownership change to use its carryforwards. Under the applicable tax rules, an ownership change occurs if holders of more than

five

percent of an issuer's outstanding common stock, collectively, increase their ownership percentage by more than

50

percentage points over a rolling

three

-year period. We have performed analyses of possible ownership changes in the past, which included consideration of

third

-party studies, and do

not

believe that an ownership change of more than

50

 percentage points has occurred.

We have evaluated all the material income tax positions taken on our income tax filings to various tax authorities, and we determined that we did

not

have unrealized tax benefits related to uncertain tax positions recorded at

December 31, 2020

and

2019

.

Because of net operating loss and tax credit carryforwards, substantially all of our tax years remain open and subject to examination.