Annual report pursuant to Section 13 and 15(d)

Note 6 - Income Taxes

v2.4.1.9
Note 6 - Income Taxes
 12 Months Ended
Dec. 31, 2014
Notes to Financial Statements  
Income Tax Disclosure [Text Block]
6.     INCOME TAXES
 
The components of income before income taxes consist of the following (in thousands):
 
   
Year Ended December 31,
  
   
2013
    
2014
  
                 
Domestic
   $ 194     $ 4,502  
Foreign
     3,997       16,134  
Income before income taxes
   $ 4,191     $ 20,636  
 
The components of the income tax provision consist of the following (in thousands):
 
   
Year Ended December 31,
  
   
2013
    
2014
  
                 
Current:
                
Federal
   $ 10     $ 104  
State
     –       11  
Foreign
     76       194  
Total current taxes
     86       309  
Deferred foreign taxes
     16       (43 )
Income tax provision
   $ 102     $ 266  
 
 
A reconciliation of the reported income tax provision to the provision that would result from applying the domestic federal statutory tax rate to pretax income is as follows (in thousands):
 
   
Year Ended December 31,
  
   
2013
    
2014
  
                 
Income tax at federal statutory rate
   $ 1,425     $ 7,016  
Effect of permanent differences
     7       9  
Change in valuation allowance
     430       (2,070 )
Foreign rate differential
     (1,218 )     (5,240 )
Change in enacted tax rates
     (597 )     38  
Expiration of net operating loss carryforward
     –       519  
Other reconciling items
     55       (6 )
Income tax provision
   $ 102     $ 266  
 
Deferred income taxes consist of the following (in thousands):
 
   
December 31,
  
   
2013
    
2014
  
                 
Deferred tax assets:
                
Net operating losses
   $ 13,115     $ 10,083  
Accrued expenses
     268       837  
Tax credits
     512       519  
Impairment of long-lived assets
     88       69  
Other
     1       –  
Total deferred tax assets
     13,984       11,508  
Valuation allowance
     (13,927 )     (11,440 )
      57       68  
                 
Deferred tax liabilities:
                
Intangible assets
     (43 )     –  
Accrued expenses
     (107 )     (64 )
Prepaids
     (11 )     (32 )
Other
     (4 )     (37 )
Total deferred tax liabilities
     (165 )     (133 )
Net deferred tax liability
   $ (108 )   $ (65 )
 
The Company has recorded a valuation allowance equal its net deferred tax assets in the U.S. and certain of its foreign jurisdictions due to the uncertainty of future operating results. The valuation allowance will be reduced at such time as management believes it is more likely than not that the deferred tax assets will be realized. Any reductions in the valuation allowance will reduce future income tax provisions.
 
At December 31, 2014, the Company has U.S. federal net operating loss carryforwards of $27.2 million that begin to expire in 2021, if not utilized. The Company also has foreign net operating loss carryforwards totaling $3.4 million in various jurisdictions with various expirations, including $2.0 million in China with expirations from 2015 to 2017. The Company has not provided for U.S. federal and foreign withholding taxes on the undistributed earnings of its foreign subsidiaries as of December 31, 2014. Such earnings are intended to be reinvested indefinitely. Generally, such earnings become subject to U.S. income tax upon the remittance of dividends and under certain other circumstances. At December 31, 2014, it is not practicable to estimate the amount of deferred tax liability on such undistributed earnings.