Note 16 - Income Taxes

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Income Tax Disclosure [Text Block]

(16) Income Taxes

The provision for income taxes reflects current taxes, deferred taxes, and withholding taxes. The effective tax rate for each of the years ended December 31, 2022 and 2021 was 0%. The Company continues to provide for a valuation allowance to offset its net deferred tax assets until such time it is more likely than not the tax assets or portions thereof will be realized.

Components of tax benefit (provision) allocated to continuing operations include the following:

	December 31,			December 31,
	2022			2021
Current:
Federal	$	(60	)	$	—
State		(20	)		(7	)
Foreign		(34	)		(9	)
Sub-total	$	(114	)	$	(16	)
Deferred:
Federal	$	17		$	—
State		—			—
Foreign		—			—
Sub-total	$	17		$	—
Total	$	(97	)	$	(16	)

The reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate is as follows:

	December 31,						December 31,
	2022			%			2021			%
Income taxes computed at statutory rates	$	12,537			(21	)%	$	7,296			(21	)%
(Increases) decreases resulting from:
Change in valuation allowance		(13,463	)		22	%		(8,634	)		24	%
NOL surrendered for refundable tax credit		(2,164	)		4	%		-			—	%
Foreign research deductions and credits		1,329			(2	)%		-			—	%
Federal and state research and experimentation credits		1,037			(2	)%		787			(2	)%
State income taxes, net of federal tax benefit		491			(1	)%		414			(1	)%
Other		136			—	%		121			—	%
Total	$	(97	)		0	%	$	(16	)		(—	)%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The tax effects of significant items comprising the Company’s deferred tax assets and deferred tax liabilities are as follows:

	December 31,			December 31,
	2022			2021
Deferred tax assets:
Federal and state net operating losses	$	74,270		$	55,481
Federal and state research and experimentation credits		10,869			9,789
Research and experimental costs		4,837			-
ASC 842 - lease liabilities		1,508			393
Stock based compensation		482			217
Deferred social security tax		—			116
Fixed asset differences		87			—
Intangible asset differences		—			53
Goodwill		36			97
Accrued compensation		69			14
Other		43			40
Total gross deferred tax assets		92,201			66,200
Less valuation allowance		(83,000	)		(64,273	)
Net deferred tax assets	$	9,201		$	1,927
Deferred tax liabilities:
Patent expenditures	$	(1,464	)	$	(1,475	)
ASC 842 - right of use assets		(1,049	)		(288	)
Fixed asset differences		(28	)		(164	)
Intangible asset differences		(6,644	)		-
Total gross deferred tax liabilities	$	(9,185	)	$	(1,927	)
Total net deferred tax assets and liabilities	$	16		$	—

The Company had a valuation allowance of $83,000 and $64,273 on deferred tax assets as of December 31, 2022 and 2021, respectively, an increase of $18,727 during the year ended December 31, 2022.

As of December 31, 2022, the Company has federal and state net operating loss carryforwards of $243,453 and $173,401, respectively, which have a carryforward of 5 years to indefinite depending on the jurisdiction.

As of December 31, 2022 and 2021, respectively, the Company has federal and state research and experimental tax credits of $11,915 and $10,369, respectively, which have a carryforward of 5 to 20 years depending on the jurisdiction.

A summary reconciliation of the Company’s uncertain tax positions is as follows:

	December 31,		December 31,
	2022		2021
Beginning balance	$	918	$	823
Addition for current year tax positions		98		84
Addition for prior year tax positions		30		11
Reduction for prior year positions		—		—
Reduction for prior year positions resolved during the current year		—		—
Ending balance	$	1,046	$	918

For the years ended December 31, 2022 and 2021, the Company recognized accrued interest and penalties associated with uncertain tax positions of $0 and $0, respectively. The Company does not anticipate any of its unrecognized benefits will significantly increase or decrease within the next 12 months.

The Company's open tax years subject to examination in the U.S. federal jurisdiction are 2019 through 2021, in applicable state jurisdictions for the tax years 2019 through 2021, and in applicable foreign jurisdictions for tax year 2021. To the extent allowed by law, the taxing authorities may have the right to examine prior periods where net operating losses or tax credits were generated and carried forward, and make adjustments up to the amount of the net operating loss or tax credit carryforward.