Note 17 - Income Taxes

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Income Tax Disclosure [Text Block]

17. INCOME TAXES

Until its reverse recapitalization on March 31, 2017, the Company was treated as a partnership for federal and state income tax purposes and did not incur income taxes. The Company accounts for income taxes under ASC 740. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is "more likely than not" that some component or all of the benefits of deferred tax assets will not be realized.

The provision/(benefit) for Income Taxes for the years ended December 31, 2023 and 2022, consists of the following:

	Year Ended December 31,
	2023			2022
Current Tax Expense/(Benefit)
Deferred Tax Expense/(Benefit)	$	(4,333	)	$	3,756
Change in Valuation Allowance		4,333			(3,756	)
Income Tax Provision/(Benefit)	$	-		$	-

The Company’s effective income tax rate is different from the federal statutory tax rate in 2023 predominantly due to the valuation allowance, permanent differences, and state taxes. A reconciliation of the statutory U.S. Federal Tax Rate to the Company's Effective Tax Rate is as follows:

	Year Ended December 31,
	2023			2022
U.S. Statutory Federal Income Tax Rate	$	(6,355	)	$	3,700
State Income Taxes, net of Federal Income tax Benefit		(421	)		345
Permanent differences and other		2,433			(289	)
Valuation Allowance		4,333			(3,756	)
Income Tax Provision/(Benefit)	$	-		$	-

Deferred income taxes represent the tax effect of transactions that are reported in different periods for financial and tax reporting purposes. The combined temporary differences and carryforwards of each tax paying component of the Company that give rise to a significant portion of the deferred income tax benefits and liabilities are as follows as of December 31, 2023 and 2022:

	Year Ended December 31,
	2023			2022
Deferred income tax assets:
Net operating loss carryforwards	$	17,002		$	14,898
Sec. 174 capitalization		1,494			-
Research and development credits		81			65
Stock Based Compensation		1,447			1,216
Accruals and Other		995			324
Total deferred tax assets (gross)		21,018			16,503
Less valuation allowance		(20,302	)		(15,969	)
Net deferred tax assets		716			534
Deferred income tax liabilities:		-			-
Depreciation and other		(716	)		(534	)
Net deferred tax liabilities	$	(716	)	$	(534	)
Net deferred income taxes	$	-		$	-

As of December 31, 2023, the Company had available federal net operating loss carryforwards of approximately $703 which begin to expire in 2037, and approximately $78.8 million which will never expire. The Company has available state net operating loss carryforwards of approximately $30.8 million as of December 31, 2023, which begin to expire in 2037. As of December 31, 2023, the Company has federal research and development tax credits of approximately $81.

The Company has provided a valuation allowance against the Company’s deferred tax assets, since, in the opinion of management, based upon the earnings history of the Company, it is not more likely than not that the benefits will be realized. All or a portion of the remaining valuation allowance may be reduced in future years based on an assessment of earnings sufficient to fully utilize these potential tax benefits.

ASC 740 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely that not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company has no material uncertain tax positions that qualify for either recognition or disclosure in consolidated financial statements.

It is the Company's policy to recognize interest and/or penalties related to income tax matters in income tax expense. As of December 31, 2023 and 2022, the Company has accrued no interest and no penalties related to uncertain tax positions. The Company does not have any federal, or state and local income tax returns currently under examination.