Annual report pursuant to Section 13 and 15(d)

Note 9 - Income Taxes

v3.22.1
Note 9 - Income Taxes
 12 Months Ended
Dec. 31, 2021
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

9.       

INCOME TAXES

 

Super League’s provision for income taxes consisted of the following for the years ended December 31, 2021 and 2020:

 

   

2021

    

2020

  

Current:

                

Federal taxes

   $ -     $ -  

State taxes

     -       -  

Total current

   $ -     $ -  

 

   

2021

    

2020

  

Deferred:

                

Federal taxes

   $ (4,654,000

)

   $ 2,919,000  

State taxes

     (969,000

)

     886,000  

Foreign

     (38,000

)

     -  

Subtotal

     (5,661,000

)

     3,805,000  

Change in valuation allowance

     2,550,000       (3,805,000

)

Total deferred

     (3,111,000

)

     -  

Provision for income taxes

   $ (3,111,000

)

   $ -  

 

The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities consist of the following as of December 31, 2021 and 2020.

 

   

2021

    

2020

  

Deferred tax assets (liabilities):

                

Net operating loss and credits

   $ 27,963,000     $ 20,799,000  

Stock compensation

     2,837,000       3,155,000  

Accrued liabilities

     11,000       65,000  

Fixed assets and intangibles

     (4,812,000 )     (106,000

)

State taxes

     1,000       -  

Total deferred tax assets

     26,000,000       23,913,000  

Valuation allowance

     (26,518,000 )     (23,913,000

)

Total deferred tax assets, net of valuation allowance

   $ (518,000

)

   $ -  

 

A reconciliation of the federal statutory income tax rate and the effective income tax rate is as follows:

 

   

2021

    

2020

  
                 

Statutory federal tax rate - (benefit) expense

     21

%

     21

%

State tax, net

     -       -  

Non-deductible permanent items

     (2

)

     (1

)

Valuation allowance

     (6

)

     (20

)
      13

%

     -

%

 

For the years ended December 31, 2021 and 2020, the Company recorded full valuation allowances against its domestic net deferred tax assets due to uncertainty regarding future realizability pursuant to guidance set forth in the FASB’s Accounting Standards Codification Topic No. 740, Income Taxes. In future periods, if the Company determines it will more likely than not be able to realize these amounts, the applicable portion of the benefit from the release of the valuation allowance will generally be recognized in the statements of operations in the period the determination is made. The Company does not maintain a valuation allowance on the activity in the UK from its recent acquisition of Bannerfy Ltd due to the deferred tax liability position.

 

At December 31, 2021, the Company had U.S. federal, state income tax, and foreign net operating loss carryforwards of approximating $102,096,000, $92,469,000 and $343,000, respectively, expiring through 2041. Utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to ownership change limitations that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended, as well as similar state provisions. The Company has not completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since the Company’s formation due to the complexity and cost associated with such a study, and the fact that there may be additional such ownership changes in the future.