Note 9 - Income Taxes

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

9. Income Taxes

For financial reporting purposes, income before income taxes includes the following during the years ended December 31:

	2013			2012			2011
United States income (loss)	$	(2,146,877	)	$	(507,197	)	$	91,329
Foreign income (loss)		(35,904	)		24,052			(10,722	)
	$	(2,182,781	)	$	(483,145	)	$	80,607

Significant components of the provision for income taxes are as follows:

	2013		2012			2011
Current:
Federal	$	—	$	(68,791	)	$	—
State		16,098		21,503			19,122
Foreign		—		—			—
Total current		16,098		(47,288	)		19,122
Deferred:
Federal		569,604		169,923			13,302
State		—		1,628			463
Foreign		52,903		7,170			10,629
		622,507		178,721			24,394
	$	638,605	$	131,433		$	43,516

The differences between the federal statutory rate and the effective tax rate as a percentage of income before taxes are as follows:

	2013			2012			2011
Statutory income tax rate		34	%		34	%		34	%
State and foreign income taxes, net of federal benefit		(1	)		1			1
Change in valuation allowance		(66	)		(69	)		—
Foreign earnings taxed at different rate		—			—			(24	)
Change in estimated state income tax rate		—			(5	)		3
Other permanent differences		4			12			40
Effective tax rate		(29%	)		(27%	)		54	%

Differences between the application of accounting principles and tax laws cause differences between the bases of certain assets and liabilities for financial reporting purposes and tax purposes. The tax effects of these differences, to the extent they are temporary, are recorded as deferred tax assets and liabilities. Significant components of the Company’s deferred tax assets and liabilities at December 31 are as follows:

	2013			2012
Deferred tax liabilities:
Property, plant and equipment	$	(137,830	)	$	(192,136	)
Prepaid expenses and other		(4,599	)		(4,599	)
Total deferred tax liabilities		(142,429	)		(196,735	)
Deferred tax assets:
Operating loss carryforwards		1,975,282			1,209,966
Postretirement benefits		21,360			22,047
Pension costs		401,428			691,824
Allowance for doubtful accounts		58,717			52,385
Other assets		3,431			5,719
Accrued expenses		139,654			171,444
Other employee benefits		22,763			16,009
Inventory costs		119,846			85,742
Total deferred tax assets		2,742,481			2,255,136
Net		2,600,052			2,058,401
Valuation allowance		(2,600,052	)		(1,142,633	)
Net	$	—		$	915,768
Current deferred tax asset	$	—		$	287,417
Long-term deferred tax asset					628,351
	$	—		$	915,768

As of December 31, 2013 and 2012, the Company’s gross deferred tax assets were approximately $2,600,000 and $2,058,000, respectively. Gross deferred tax assets as of December 31, 2013 and 2012 reflect the benefit of approximately $4,861,000 and $2,993,000 in net operating loss carryforwards for federal and state income tax purposes which are available to offset future federal and state income tax and which expire in varying amounts between 2027 and 2033. Gross deferred tax assets are reduced by a valuation allowance as of December 31, 2013 and 2012 of approximately $2,600,000 and $1,143,000, respectively.

Pursuant to ASC-740—Income Taxes, when establishing a valuation allowance, the Company considers future sources of taxable income such as future reversals of existing taxable temporary differences, future taxable income exclusive of reversing temporary differences and carryforwards and tax planning strategies. The Company must also take into account recent trends of taxable income and/or losses and its ability to project sufficient taxable income in future periods. Under ASC 740, all available evidence, both positive and negative, shall be considered to determine whether, based on the weight of that evidence, a deferred tax asset will be realized in future periods. Due to the existence of significant negative evidence, primarily cumulative taxable losses in recent periods and limited operating income, the Company has determined that it is more likely than not that its deferred tax assets will not be realized in future periods. Accordingly, the Company increased the valuation allowance to fully offset the gross deferred tax asset balance at December 31, 2013. If it is later determined that it is more likely than not the deferred tax assets will be realized, the Company will release the valuation allowance to current earnings.

The Company has not provided deferred taxes for taxes that could result from the remittance of undistributed earnings of the Company’s foreign subsidiary since it has generally been the Company’s intention to reinvest these earnings indefinitely. Undistributed earnings that could be subject to additional income taxes if remitted were approximately $112,000 at December 31, 2013.

The Company files an income tax return in the U.S. federal jurisdiction, Texas, and a number of other U.S. state and local jurisdictions. Tax returns for the years 2009 through 2013 remain open for examination in various tax jurisdictions in which it operates. At December 31, 2013, there were no unrecognized tax benefits from uncertain tax positions and, accordingly, no interest related to uncertain tax positions had been accrued.