Note 3 - Income Taxes

3 Months Ended

Mar. 31, 2015

3.	INCOME TAXES

The effective tax rate for the three-month period ended March 31, 2015 increased to 39.8% compared to 34.6% for the same period in 2014. This increase was primarily due to a capital loss valuation allowance recorded in three-month period ended March 31, 2015 due to thewrite-off the option for a potential acquisition partner that was not exercised on March 31, 2015. The option was extended until June 30, 2015 decreasing the probability of the exercise, and certain terms were changed in the arrangement causing a decrease in the value of the option.

The unrecognized tax benefit as of March 31, 2015, was $371,000, excluding interest of $9,000 and penalties of $7,000. Of this amount, $210,000, represents the net unrecognized tax benefits that, if recognized, would favorably impact the effective income tax rate. The remaining $161,000 at March 31, 2015 would have no impact on the effective tax rate, if recognized. The Company accrues interest and penalties related to uncertain tax position in the statements of income as income tax expense.

- 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.

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