Note 11 - Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Text Block]

11.    Income Taxes

The Company files income tax returns in the United States federal jurisdiction, as well as in various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to United States federal, state, and local, or non-United States income tax examinations by tax authorities for years before 2009.  The Company’s practice is to recognize interest and penalties related to income tax matters in income tax expense when and if they become applicable.  As of December 31, 2012 and 2011, there were no accrued interest and penalties related to uncertain tax positions.

The components of the benefit from (provision for) income taxes are as follows (in thousands):

	Years ended December 31,
	2012		2011			2010
Current
Federal	$	-	$	-		$	-
Foreign		-		12			-
State		-		2			(10	)
		-		14			(10	)
Deferred
Federal		-		-			-
Foreign		-		(12	)		4
State		-		-			-
		-		(12	)		4
Benefit from (provision for) income taxes	$	-	$	2		$	(6	)

The following table shows the geographic components of pretax income (loss) from continuing operations between United States and foreign subsidiaries (in thousands):

	December 31,
	2012			2011			2010
United States	$	(5,471	)	$	(5,752	)	$	(8,410	)
Foreign subsidiaries		(238	)		(305	)		(101	)
Loss before income taxes	$	(5,709	)	$	(6,057	)	$	(8,511	)

The principal items accounting for the difference between income taxes computed at the United States statutory rate and the benefit from (provision for) income taxes reflected in the statements of operations are as follows:

	Years ended December 31,
	2012			2011			2010
United States statutory rate		34.0	%		34.0	%		34.0	%
State taxes (net of federal tax benefit)		1.8	%		2.7	%		(0.1	%)
Valuation allowance		(27.8	%)		(34.4	%)		(33.7	%)
Other		(8.0	%)		(2.3	%)		(0.2	%)
		0.0	%		0.0	%		0.0	%

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets are as follows (in thousands):

	December 31,
	2012			2011			2010
Allowance for doubtful accounts	$	53		$	60		$	87
Accrued expenses and other reserves		2,197			2,264			2,146
Tax credits, deferred R&D, and other		907			656			899
Net operating loss		25,980			24,931			22,088
Valuation allowance		(29,135	)		(27,909	)		(25,206	)
Net total deferred taxes	$	2		$	2		$	14

Since the Company believes that it is more likely than not that the benefit from net operating loss carry-forwards will not be realized, the Company has provided a full valuation allowance against its United States deferred tax assets. The net deferred tax assets for 2012 amounted to $2 thousand and were for the Company’s United Kingdom subsidiary, which has been profitable in prior years.  The Company had no net deferred tax liabilities at December 31, 2012 and at December 31, 2011.  There were no Federal tax expenses for the United States operations in 2012, as any expected benefits were offset by an increase in the valuation allowance.

As of December 31, 2012, the Company has a net operating loss carry-forward of approximately $70.7 million for federal, state and local income tax purposes. If not utilized, these carry-forwards will begin to expire in 2021 for federal and have begun to expire for state and local purposes.  Due to changes in the Company’s capital structure, the net operating loss carry-forward available to the Company in future years to offset future taxable liabilities may be limited under Section 382 of the Internal Revenue Code (the “Code”).  Management is currently reviewing the rules under this section of the Code, but believes that the limitation on the Company’s net operating loss carry-forward may be significant.