Income Taxes

6 Months Ended

Jun. 30, 2013

Income Taxes [Abstract]

Income Taxes [Text Block]

I. Income Taxes

The Company had net deferred tax assets of $3,922,000 as of December 31, 2012, which were comprised of the following:  (i) net operating loss ("NOL") deferred tax assets of $2,116,000, resulting from an NOL carry-forward of approximately $6,223,000, which expire in years 2023 through 2032; (ii) research and development credit carry-forwards of approximately $994,000, which can be used to reduce future income tax liabilities and expire principally between 2020 and 2031; (iii) foreign tax credit carry-forwards of approximately $359,000, which are available to reduce future U.S. income tax liabilities subject to certain limitations and that expire in years 2018 through 2020, (iv) alternative minimum tax credit carry-forwards of approximately $111,000, and (v) other net deferred tax assets totaling $342,000.

The Company recorded a provision of ($3,922,000) and a benefit of $377,000 for income taxes, respectively, in the six months ended June 30, 2013 and 2012. Foreign tax benefits of $0 and $17,000, respectively, were provided in each of those periods. The provision is based on our estimated tax liability at the end of the year, including our assessment of the probability that we will be able to utilize our net operating losses and tax credits prior to expiration.  As of June 30, 2013, the Company's estimated consolidated annual effective tax rate was 40% before considering the current year change in the valuation allowance.

Based on the Company's assessment of the uncertainty surrounding the realization of the favorable U.S. tax attributes in future tax returns in accordance with the provisions of ASC 740, Income Taxes, the Company has determined that a full valuation allowance against our otherwise recognizable U.S. net deferred tax assets is required as of June 30, 2013.  The Company has recorded a full valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized.  When assessing the need for valuation allowances, the Company considers future taxable income and ongoing prudent and feasible tax planning strategies.  Should a change in circumstances lead to a change in judgment about the ability to realize deferred tax assets in future years, the Company will adjust related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or charge to income.