NOTE 13 - INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

Note 13 - Income Taxes Tables

Components of income (loss) before taxes

Components of income (loss) before taxes:

	Year Ended Dec. 31,
(in thousands)	2012			2011
U.S. operations	$	(6,484	)	$	(207	)
Foreign operations		(272	)		1,503
Total income (loss) before taxes	$	(6,756	)	$	1,296
Income tax expense (benefit) consists of:
U.S. federal	$	(8	)	$	20
State		(19	)		22
Foreign		(300	)		191
		(327	)		233
Deferred tax expense (benefit) – U.S. federal		-			-
Total income tax expense (benefit)	$	(327	)	$	233

Reconciliation of our effective income tax and the U.S. federal tax rate

A reconciliation of our effective income tax and the U.S. federal tax rate is as follows:

	Year Ended Dec. 31,
	2012			2011
(in thousands)
Statutory tax	$	(1,937	)	$	441
State and foreign income tax, net of
federal income tax benefit		(324	)		(323	)
Valuation allowance for deferred tax assets		1,934			115
Total income tax expense (benefit)	$	(327	)	$	233

Tax effects of temporary differences that gave rise to significant portions of the deferred tax assets

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets are presented below:

	Year Ended December 31,
	2012			2011
(in thousands)
Deferred income tax assets:
Allowance for doubtful accounts	$	25		$	28
Inventory and product return reserves		786			699
Compensation accruals		1,116			963
Accrued liabilities		697			29
Book-over-tax depreciation and amortization		262			274
Foreign net operating loss carryforwards		800			704
U.S. net operating loss carryforwards		6,054			5,156
U.S. credit carryforwards		951			1,053
		10,691			8,906
Valuation Allowance		(10,691	)		(8,906	)
Total Deferred Income Tax Assets	$	-		$	-

Gross changes in uncertain tax positions resulting in unrecognized tax benefits

The gross changes in uncertain tax positions resulting in unrecognized tax benefits are presented below:

	Year Ended Dec. 31,
	2012		2011
(in thousands)
Unrecognized tax benefits, opening balance	$	113	$	98
Prior period tax position increases		19		5
Additions based on tax positions related to current year		-		10
Unrecognized tax benefits, ending balance	$	132	$	113