Note 14 - Income Taxes

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

14. INCOME TAXES

(Loss) income before income taxes consisted of the following:

(In thousands)	For the Years Ended December 31,
	2021			2020
Continuing operations	$	(60,351	)	$	(27,153	)
Discontinued operations		(12,705	)		(3,097	)
Loss before income taxes	$	(73,056	)	$	(30,250	)

Loss from continuing operations before taxes consisted of the following:    

(In thousands)	For the Years Ended December 31,
	2021			2020
U.S. operations	$	(60,351	)	$	(27,153	)
Loss before income taxes	$	(60,351	)	$	(27,153	)

The income tax (benefit) expense allocation for the years ended  December 31, 2021 and 2020 consisted of the following:

(In thousands)	For the Years Ended December 31,
	2021			2020
Continuing operations	$	(10,508	)	$	(1,451	)
Discontinued operations		(1,334	)		(1,352	)
Total income tax (benefit)	$	(11,842	)	$	(2,803	)

The income tax (benefit) expense from continuing operations consisted of the following:

(In thousands)	For the Years Ended December 31,
	2021			2020
Current:
Federal	$	—		$	—
State and local		370			119
Total current provision		370			119
Deferred:
Federal		(8,714	)		(1,258	)
State and local		(2,164	)		(312	)
Total deferred (benefit)		(10,878	)		(1,570	)
Total income tax (benefit)	$	(10,508	)	$	(1,451	)

The following table provides a reconciliation of the federal statutory tax at 21% to the recorded tax expense (benefit) from continuing operations for the years ended December 31, 2021 and 2020, respectively:

(In thousands)	For the Years Ended December 31,
	2021			2020
Computed federal income taxes at the statutory rate (benefit)	$	(12,674	)	$	(5,702	)
State taxes		292		$	94
Permanent tax differences and limited compensation		2,140			(34	)
Foreign tax rates and tax credits differing from USA		—			—
Expired NOL's		541			—
Refundable Foreign R&D Credits		—			—
Change in valuation allowance		(807	)		4,191
Total income tax (benefit)	$	(10,508	)	$	(1,451	)
Effective tax rate		17.41	%		5.34	%

The Company accounts for income taxes under the asset-liability method. 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. Valuation allowances are provided when it is “more likely than not” that the benefits of existing deferred tax assets will not be realized in a future period. Significant components of the Company’s deferred tax assets and liabilities as

of December 31, 2021 and 2020, respectively, are as follows:

(In thousands)	As of December 31,
	2021			2020
Deferred tax assets:
Net operating loss carryforwards	$	23,941		$	19,198
Inventory and accounts receivable reserves		1,826			2,104
Operating lease obligations		8,058			1,801
Accrued liabilities		786			927
Other		4,371			1,209
Valuation allowance		(20,129	)		(19,817	)
Deferred tax assets after valuation allowance		18,853			5,422
Deferred tax liabilities
Intangible assets		(9,426	)		(3,274	)
Property, plant and equipment		(9,588	)		(2,050	)
Total deferred tax liabilities		(19,014	)		(5,324	)
Net deferred tax asset (liability)	$	(161	)	$	98

The Company adopted the provisions of ASU 2015-17 in 2015. ASU 2015-17 requires that all deferred tax assets and liabilities be classified as noncurrent on the balance sheet. The net deferred tax asset as of  December 31, 2021 is recorded within other assets and the net deferred tax liability recorded as of December 31, 2020 was zero.

As of December 31, 2021 and 2020, the Company recorded a valuation allowance of $20.1 million and $19.8 million, respectively. During the years ended December 31, 2021 and 2020, the Company recorded an increase in valuation allowance of $0.3 million and $7.4 million, respectively. The state taxes included in the rate reconciliation table is net of the change in state valuation allowance. As of December 31, 2021, the Company has available federal, state and foreign net operating loss carry forwards of approximately $97.3 million, $21.3 million and $16.5 million, respectively which have various expiration dates beginning in 2026 through 2037.

The Company files consolidated income tax returns for federal and many state jurisdictions in addition to separate subsidiary income tax returns in Australia, Canada, India and the United Kingdom. The Company has an insignificant amount of foreign taxes that have not been separately presented. As of December 31, 2021, the Company is not under examination by any income tax jurisdiction. The Company is no longer subject to examination in the USA for years prior to 2018.

The Company accounts for income tax uncertainties using a threshold of "more-likely-than-not" in accordance with the provisions of ASC Topic 740, Income Taxes ("ASC 740"). As of December 31, 2021, the Company has reviewed all of its tax filings and positions taken on its returns and has not identified any material current or future effect on its consolidated results of operations, cash flows or financial position. As such, the Company has not recorded any tax, penalties or interest on tax uncertainties. It is Company policy to record any interest on tax uncertainties as a component of income tax expense.