Note 2 - Income taxes

Income tax benefit for the years ended December 31, 2014 and 2013 were $906,000 and $3,576,000, respectively. The income tax benefits for each of the years ended December 31, 2014 and 2013 were for federal and state income tax at statutory rates applied to the pre-tax loss for each of the periods. Additionally, in 2014, the Company recognized a tax benefit from a prior year true up that will result in a current year tax deduction.

The following summarizes the (benefit) / provision for income taxes:

Years Ended December 31,	2014		2013
(in thousands)

Current:
Federal	$	0	$	(1,904)
State and local		(49)		(224)
		(49)		(2,128)
Deferred:
Federal		(767)		(1,295)
State and local		(90)		(153)
		(857)		(1,448)
Benefit for income taxes	$	(906)	$	(3,576)

Reconciliation of the Company's actual tax rate to the U.S. Federal statutory rate is as follows:

Years ended December 31,	2014			2013
Income tax rates
- Statutory U.S. federal rate		34	%		34	%
- States, net U.S. benefits		4	%		4	%
- Tax benefit from prior year		18	%		0
Total		56	%		38	%

As of December 31, 2014, the Company had NOL's of approximately $16,000,000 expiring through 2033. Approximately $8,000,000 of the Company’s $16,000,000 of NOL’s are subject to annual limitations of $1,300,000.

Elements of deferred income tax assets (liabilities) are as follows:

December 31,	2014		2013
(in thousands)
Deferred tax assets (liabilities)
- Depreciation & amortization	$	(428)	$	(542)
- Reserves for doubtful accounts		92		86
- Inventory reserve		305		120
- Non qualified stock options		215		0
- NOL		6,244		5,906
Total	$	6,428	$	5,570

The Company considered its projected future taxable income, and associated annual limitations, in determining the amount of deferred tax assets to recognize. The Company believes that given the extended time period that it may recognize its deferred tax assets, it is more likely than not it will realize the benefit of these assets prior to their expiration.