INCOME TAXES

12 Months Ended

Dec. 31, 2023

INCOME TAXES

INCOME TAXES

NOTE 12 – INCOME TAXES

Components of income (loss) before taxes:

	Year Ended December 31,
(in thousands)	2023			2022
U.S. operations	$	(536	)	$	(1,622	)
Foreign operations		1,216			1,185
Total income (loss) before taxes	$	680		$	(437	)

Income tax expense (benefit) consists of:

	Year Ended December 31,
(in thousands)	2023		2022
Current tax expense (benefit)
U.S. federal	$	0	$	0
State		20		19
Foreign		174		664
		194		683
Deferred tax expense (benefit) – U.S. federal		-		-
Total income tax expense (benefit)	$	194	$	683

A reconciliation of our effective income tax and the U.S. federal tax rate is as follows:

	Year Ended December 31,
(in thousands)	2023			2022
Statutory tax	$	143		$	(92)
State and foreign income tax, net of federal tax benefit		(178	)		(189	)
Valuation allowance for deferred tax asset		139			370
Foreign sourced deemed dividend income		322			738
Stock based compensation		(250	)		(154	)
Other		18			10
Total income tax expense (benefit)	$	194		$	683

U.S. net operating loss carryforwards are $13.8 million at December 31, 2023 with expiration years from 2023 to 2034.  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. We have not had a Section 382 ownership change, but if we did the usage of these tax assets would have an income usage limitation based on the value of the Company at the time of the change times the federal long-term tax-exempt rate.

The gross changes in uncertain tax positions resulting in unrecognized tax benefits are presented below:

	Year Ended December 31,
	2023			2022
(in thousands)
Unrecognized tax benefits, opening balance	$	422		$	392
Prior period tax position increases		(6	)		-
Additions based on tax positions related to current year		14			30
Unrecognized tax benefits, ending balance	$	430		$	422

Historically, we have incurred minimal interest expense and no penalties associated with tax matters.  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 2020, 2021, 2022 and 2023 in the United States of America.  In addition, various tax years from 2002 to 2014 may be subject to examination in the event that we utilize the net operating losses and credit carryforwards from those years in our current or future year tax returns.