Note 13 - Income Taxes

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note 13 — Income Taxes

The reconciliation of the federal statutory income tax rate to our effective income tax rate is as follows:

	Year Ended
	December 31,
	2020			2019
U.S. federal statutory rate, beginning of year		21	%		21	%
Officers' compensation		2			7
Other		(3	)		(2	)
Valuation allowance		(20	)		(26	)
Effective tax rate as reported		—	%		—	%

Significant components of our deferred tax assets and liabilities at  December 31, 2020 and 2019 are as follows (in thousands):

	Year Ended
	December 31,
	2020			2019
Deferred tax assets
Net operating loss carryforwards and credits	$	20,698		$	15,064
Share-based compensation expense		3,813			3,441
Property, plant and equipment		725			1,025
Common stock warrant liabilities		—			524
Operating lease liabilities		91			147
Other		54			21
Less: valuation allowance		(22,669	)		(19,802	)
Total deferred tax assets		2,712			420
Deferred tax liabilities
Common stock warrant liabilities		(1,129	)		—
Operating lease Right-of-use assets		(1,583	)		(420	)
Total deferred tax liabilities		(2,712	)		(420	)
Net deferred tax assets (liabilities)	$	—		$	—

The federal deferred tax assets presented above do not include the state tax benefits as our net deferred state tax assets are offset with a full valuation allowance.

At December 31, 2020, we had federal net operating loss (“NOL”) carryforwards of approximately $98.6 million. Approximately $26.1 million of these NOL carryforwards will expire between 2034 and 2038.

Due to our history of NOLs, current year NOLs and significant risk factors related to our ability to generate taxable income, we have established a valuation allowance to offset our deferred tax assets as of December 31, 2020 and 2019. We will continue to evaluate our ability to release the valuation allowance in the future. Due to our full valuation allowance, we have not recorded a provision for federal or state income taxes during the years ended  December 31, 2020 or 2019.  Deferred tax assets and deferred tax liabilities are classified as non-current in our Consolidated Balance Sheets.

The Tax Reform Act of 1986 (as amended) contains provisions that limit the utilization of NOL and tax credit carryforwards if there has been a change in ownership as described in Section 382 of the Internal Revenue Code (“Section 382”).  Substantial changes in the Company's ownership have occurred that may limit or reduce the amount of NOL carryforwards that the Company could utilize in the future to offset taxable income. The Company has not completed a detailed Section 382 study at this time to determine what impact, if any, that ownership changes may have had on its NOL carryforwards.  In each period since its inception, the Company has recorded a valuation allowance for the full amount of its deferred tax assets, as the realization of the deferred tax asset is uncertain. As a result, the Company has not recognized any federal or state income tax benefit in its Consolidated Statement of Operations.

We remain subject to periodic audits and reviews by taxing authorities; however, we did not have any open income tax audits as of December 31, 2020. The federal tax returns for the years beginning 2015 remain open for examination.

In response to the global pandemic related to COVID-19, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) on March 27, 2020 and the Consolidated Appropriations Act, 2021 (the “CAA”) on December 27, 2020.  The CARES Act and the CAA provide numerous relief provisions for corporate taxpayers, including modification of the utilization limitations on NOLs, favorable expansions of the deduction for business interest expense under Internal Revenue Code Section 163(j), and the ability to accelerate timing of refundable alternative minimum tax credits.  For the year ended December 31, 2020, there were no material tax impacts to our consolidated financial statements from the CARES Act, the CAA or other COVID-19 measures.  The Company continues to monitor additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service and others.