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NOTE 13 - INCOME TAXES | 12 Months Ended
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Dec. 31, 2013
Income Tax Disclosure [Abstract] |
NOTE 13 - INCOME TAXES | Components of income (loss) before taxes:
|  | Year Ended Dec. 31,
(in thousands) |  | 2013 |  | 2012
U.S. operations |  | ($2,270) |  | ($6,484)
Foreign operations |  | (314) |  | (272)
Total income (loss) before taxes |  | ($2,584) |  | ($6,756)
Income tax expense (benefit) consists of:
|  | Year Ended Dec. 31,
Current tax expense (benefit) |  | 2013 |  | 2012
U.S. federal |  | $0 |  | ($8)
State |  | 8 |  | (19)
Foreign |  | (16) |  | (300)
|  | (8) |  | (327)
Deferred tax expense (benefit) – U.S. federal |  | - |  | -
Total income tax expense (benefit) |  | ($8) |  | ($327)
A reconciliation of our effective income tax and the U.S. federal tax rate is as follows:
|  | Year Ended Dec. 31,
|  | 2013 |  | 2012
(in thousands) |  |  |  |
Statutory tax |  | ($879) |  | ($1,937)
State and foreign income tax, net of |  |  |  |
federal income tax benefit |  | (125) |  | (324)
Valuation allowance for deferred tax assets |  | 996 |  | 1,934
Total income tax expense (benefit) |  | ($8) |  | ($327)
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets are presented below:
|  | Year Ended December 31,
|  | 2013 |  | 2012
(in thousands) |  |  |  |
Deferred income tax assets: |  |  |  |
Allowance for doubtful accounts |  | $25 |  | $25
Inventory and product return reserves |  | 746 |  | 786
Compensation accruals |  | 1,341 |  | 1,116
Accrued liabilities |  | 28 |  | (105)
Book-over-tax depreciation and amortization |  | 1,021 |  | 1,064
Foreign net operating loss carryforwards |  | 999 |  | 800
U.S. net operating loss carryforwards |  | 6,739 |  | 6,054
U.S. credit carryforwards |  | 1,142 |  | 951
|  | 12,041 |  | 10,691
Valuation Allowance |  | (12,041) |  | (10,691)
Total Deferred Income Tax Assets |  | $ - |  | $ -
The valuation allowance for deferred tax assets increased $1,350,000 during the year ended December 31, 2013, and increased $1,785,000 during the year ended December 31, 2012. The net deferred tax assets have a full valuation allowance provided due to uncertainty regarding our ability to utilize such assets in future years. This full valuation allowance evaluation is based upon our volatile history of losses and the cyclical nature of our industry and capital spending. Credit carryforwards consist primarily of research and experimental and alternative minimum tax credits with expiration years from 2020 to 2033. U.S. net operating loss carryforwards are $19,821,000 at December 31, 2013 with expiration years from 2020 to 2033. Utilization of net operating loss and credit carryforwards is subject to certain limitations under Section 382 of the Internal Revenue Code of 1986, as amended. The gross changes in uncertain tax positions resulting in unrecognized tax benefits are presented below:
|  | Year Ended Dec. 31,
|  | 2013 |  | 2012
(in thousands) |  |  |  |
Unrecognized tax benefits, opening balance |  | $132 |  | $113
Prior period tax position increases |  | 23 |  | 19
Additions based on tax positions related to current year |  | 25 |  | -
Unrecognized tax benefits, ending balance |  | $180 |  | $132
Historically, we have not incurred any interest or penalties associated with tax matters and no interest or penalties were recognized during 2013. However, we have adopted a policy whereby amounts related to penalties associated with tax matters are classified as general and administrative expense when incurred and amounts related to interest associated with tax matters are classified as interest income or interest expense. Tax years that remain open for examination include 2010, 2011, 2012 and 2013 in the United States of America. In addition, tax years from 2000 to 2009 may be subject to examination in the event that we utilize the net operating losses and credit carryforwards from those years in its current or future year tax returns.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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