Note 6 - Income Taxes

6 Months Ended

Jun. 30, 2015

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

6

.  -  INCOME TAXES

The Company records a valuation allowance when it is “more likely than not” that all or a portion of a deferred tax asset will not be realized. Management reviews all available positive and negative evidence, including the Company’s current and past performance, the market environment in which the Company operates, the utilization of past tax credits, length of carry back and carry forward periods, existing contracts or sales backlog that will result in future profits, as well as other factors. The Company continues to maintain a valuation allowance on all of the net deferred tax assets for the periods presented. Until an appropriate level of profitability is sustained, the Company expects to continue to record a full valuation allowance on future tax benefits except for those that may be generated in foreign jurisdictions. The effective income tax rates for the periods presented differ from the U.S. statutory rate as the Company continues to provide a full valuation allowance for the net deferred tax assets at June 30, 2015 and 2014.

The Company is under a tax audit in France related to the years ended December 31, 2011, 2010, and 2009 and has previously recorded unrecognized tax benefits relating to an uncertain tax position of $752,000 related to an exposure of $5.2 million, including estimated penalties and interest, on research and development tax credits taken in all prior years. However, based on discussions between the Company’s French tax attorneys and the French Tax Administration, the Company expects to receive a tax bill from the French Tax Administration in the third quarter of 2015 that may cause a significant change to this tax position. The Company believes its unrecognized tax benefits estimate at June 30, 2015 is reasonable under ASC 740; but if the Company receives a tax bill that significantly exceeds its estimates, it may have to decide whether to institute litigation to dispute the tax bill. The final outcome of tax audits and potential related litigation is inherently uncertain. As a result, the adverse resolution of this tax audit or any related litigation could be significantly different from amounts reflected in the Company’s income tax provisions and liabilities.