Note

- Income Taxes

For the years ended

December 31, 2019

and

2018,

we recognized income tax expense (benefit) of

$1,457

and (

$18,386

), respectively.

	Year ended December 31
	2019			2018
Current:
Federal	$	-		$	-
State		43			-
Foreign		203			257
		246			257
Deferred:
Federal		1,236			(18,514	)
State		-			-
Foreign		(25	)		(129	)
		1,211			(18,643	)
Total income tax provision	$	1,457		$	(18,386	)

The income tax benefit for

2018

primarily represents a non-cash benefit of

$18,652

upon recognizing the release of the valuation allowance on our U.S. deferred tax assets as of

December 31, 2018.

As of

December 31, 2018,

the Company recognized the release of the valuation allowance on our net operating loss carryforwards and other U.S. deferred tax assets on the basis of management’s assessment. In evaluating the realizability of our U.S. deferred tax assets, management considered all available evidence and concluded that positive factors, including further demonstration of sustained profitability in our core business and continued improvement in our ability to achieve internal earnings forecasts, outweighed all negative factors, including our history of operating losses (prior to

2015

) and historical operating volatility in our core business. Our assessment also considered our expectation to utilize our domestic net operating loss carryforwards, which expire

2020

thru

2035,

and our general business tax credits, which expire

2028

thru

2037.

Based on the results of our assessment, management concluded that it is more likely than

not

that our U.S. deferred tax assets will be fully realized. As of

December 31, 2019,

our domestic net operating loss carryforwards and general business tax credits were

$58,400

and

$1,907,

respectively.

As of

December 31, 2019

and

2018,

for certain past operations in the U.K., we continue to report a valuation allowance for net operating loss carryforwards of approximately

$10,600,

nearly all of which can be carried forward indefinitely. Management has concluded that the realizability of the U.K. net operating loss carryforwards is

not

more likely than

not,

as utilization of the net operating losses

may

be limited due to the change in the past U.K. operation. These net operating losses in the U.K. cannot currently be used to reduce taxable income at our other U.K. subsidiary, Accutronics Ltd. There are

other deferred tax assets related to the past U.K. operations. As of

December 31, 2019

and

2018,

we have

not

recognized a valuation allowance against our other foreign deferred tax assets, as we believe that it is more likely than

not

that they will be realized. We will continue to evaluate the realizability of our deferred tax assets in future periods.

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes. Significant components of our deferred tax assets and liabilities are as follows:

	December 31
	2019			2018
Deferred tax assets:
Property, plant and equipment	$	-		$	168
Net operating loss carryforwards		14,579			15,622
Tax credit carryforwards		1,907			1,817
Intangible assets		1,283			1,231
Accrued expenses, reserves and other		2,265			1,838
Total deferred tax assets		20,034			20,676
Valuation allowance for deferred tax assets		(1,942	)		(1,942	)
Net deferred tax assets		18,092			18,734

Deferred tax liabilities:
Other		-			(25	)
Property, plant and equipment		(342	)		-
Intangible assets		(5,087	)		(3,856	)
Total deferred tax liabilities		(5,429	)		(3,881	)

Net deferred tax assets	$	12,663		$	14,853

Net deferred tax assets (liabilities) are comprised of the following balance sheet amounts:

	December 31
	2019			2018

Deferred tax assets	$	13,222		$	15,444
Deferred tax liabilities		(559	)		(591	)
	$	12,663		$	14,853

December 31, 2019,

the Company maintains its assertion that all foreign earnings will be indefinitely reinvested in those operations.

For financial reporting purposes, income from continuing operations before income taxes is as follows:

	Year ended December 31
	2019		2018
United States	$	5,992	$	6,226
Foreign		779		387
	$	6,771	$	6,613

The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to income from continuing operations before income taxes as follows:

	Year ended December 31
	2019			2018

Statutory income tax rate		21	%		21	%
(Increase) decrease in tax provision resulting from:
Equity compensation		(0.4	)		(2.9	)
Income tax credits		(0.4	)		(1.0	)
Foreign tax rates		(0.5	)		0.3
Valuation allowance		-			(297.3	)
Other		1.8			2.0
Effective income tax rate		21.5	%		(277.9	)%

Accounting for Uncertainty in Income Taxes

There were

unrecognized tax benefits related to uncertain tax positions at

December 31, 2019

and

2018.

As a result of our operations, we file income tax returns in various jurisdictions including U.S. federal, U.S. state and foreign jurisdictions. We are routinely subject to examination by taxing authorities in these various jurisdictions. Our U.S. tax matters for the years

2000

through

2019

remain subject to examination by the Internal Revenue Service (“IRS”) due to our net operating loss carryforwards. Our U.S. tax matters for the years

2000

through

2019

remain subject to examination by various state and local tax jurisdictions due to our net operating loss carryforwards. Our tax matters for the years

2010

through

2019

remain subject to examination by the respective foreign tax jurisdiction authorities.