Note 11 - Income Taxes |
9 Months Ended |
|---|---|
Jul. 31, 2021 | |
| Notes to Financial Statements | |
| Income Tax Disclosure [Text Block] |
Note 11. Income Taxes
For the third fiscal quarter ended July 31, 2021, the Company recorded income tax expense of $1.7 million on pretax income of $6.3 million. For the same quarter a year ago, the Company recorded income tax benefit of $0.5 million on a pretax loss of $0.2 million. For the first nine months of 2021, the Company recorded income tax benefit of $0.8 million on pretax loss of $19.3 million. For the same period a year ago, the Company recorded income tax benefit of $3.8 million on pretax loss of $62.4 million. For the nine-month period ended July 31, 2021, the Company’s effective tax rate was significantly impacted by the $11.2 million change in fair value of warrant liabilities, all of which is not recognized for tax purposes. The effective tax rates for the three and nine-month periods ended July 31, 2020 were impacted by (1) the respective change in fair value of warrant liabilities, all of which is not recognized for tax purposes, (2) a $2.0 million contingent liability charge that was not deductible for tax purposes and (3) a $1.4 million discrete benefit from the revaluation of net operating losses that were carried back during the period. In addition, the income tax provision for the year-to-date period ended July 31, 2020 was impacted by the goodwill and intangibles impairment recorded during the fiscal 2020 second quarter, as most of the impairment was not deductible, and a rate change in the UK that drove an increase in expense to the tax provision of $0.9 million.
At July 31, 2021 and October 31, 2020, we had deferred tax liabilities, net of deferred tax assets, of $67.2 million and $68.0 million, respectively. Included in deferred tax assets at July 31, 2021 and October 31, 2020 were net operating loss carryforwards of $13.3 million and $10.3 million, respectively. The Company has a valuation allowance of $0.1 million as of both July 31, 2021 and October 31, 2020 related to foreign tax credit carryforwards where realization is more uncertain at this time due to the limited carryforward periods that exist. |