Annual report pursuant to Section 13 and 15(d)

Note 6 - Income Taxes

v2.4.0.8
Note 6 - Income Taxes
12 Months Ended
Dec. 31, 2013
Income Tax Disclosure [Abstract]  
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,

 
   

2012

   

2013

 
                 

Domestic

  $ (2,824 )   $ 194  

Foreign

    5,430       3,997  

Income before income taxes

  $ 2,606     $ 4,191  

The components of the income tax provision (benefit) consist of the following (in thousands):


   

Year Ended December 31,

 
   

2012

   

2013

 
                 

Current:

               

Federal

  $     $ 10  

Foreign

    32       76  

Total current taxes

    32       86  

Deferred foreign taxes

    (56 )     16  

Income tax provision (benefit)

  $ (24 )   $ 102  

A reconciliation of the reported income tax provision (benefit) 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,

 
   

2012

   

2013

 
                 

Income tax at federal statutory rate

  $ 886     $ 1,425  

Effect of permanent differences

    8       7  

Increase in valuation allowance

    672       430  

Foreign rate differential

    (1,576 )     (1,218 )

True up of foreign tax balances

    1       (597 )

Other reconciling items

    (15 )     55  

Income tax provision (benefit)

  $ (24 )   $ 102  

Deferred income taxes consist of the following (in thousands):


   

December 31,

 
   

2012

   

2013

 
                 

Deferred tax assets:

               

Net operating losses

  $ 15,081     $ 13,115  

Stock-based compensation

    352    

 

Accrued expenses

    104       268  

Tax credits

    501       512  

Impairment of long-lived assets

    76       88  

Other

    75       1  

Total deferred tax assets

    16,189       13,984  

Valuation allowance

    (16,141 )     (13,927 )
      48       57  
                 

Deferred tax liabilities:

               

Intangible assets

    (43 )     (43 )

Accrued expenses

    (91 )     (107 )

Prepaids

 

      (11 )

Other

    (6 )     (4 )

Total deferred tax liabilities

    (140 )     (165 )

Net deferred tax liability

  $ (92 )   $ (108 )

The Company has recorded a valuation allowance to equal its net deferred tax assets 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, 2013, the Company has U.S. federal net operating loss carryforwards of $33.0 million that begin to expire in 2021, if not utilized. The Company also has foreign net operating loss carryforwards totaling $7.3 million in various jurisdictions with various expirations, including $4.2 million in China with expirations from 2014 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, 2013. 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, 2013, it is not practicable to estimate the amount of deferred tax liability on such undistributed earnings.