Note 5 - Taxes

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note 5 --	Taxes
	The interim financial statement provision (benefit) for income taxes is different from the amounts computed by applying the
	United States federal statutory income tax rate of 34%.   In summary, the reasons for these differences are as follows:

	Nine months ended September 30
	2017			2016
Income taxes (benefit) at U.S. statutory rate	$	(98,000	)	$	(293,000	)
Change in valuation allowance		201,000			363,000
State income taxes, net of federal benefit		11,000			20,000
Higher / (lower) effective taxes on earnings/losses in certain foreign countries		(103,000	)		(50,000	)
Foreign corporate income taxes		28,000			66,000
Other, net		(11,000	)		(71,000	)
	$	28,000		$	35,000

For fiscal year

2016,

beginning in the

second

quarter, the Company determined that it was more likely than

not

that

2016

U.S. federal and various state net operating losses primarily generated in

2016

would

not

be realized based on projections of future U.S. taxable income, estimated reversals of existing taxable timing differences, and other considerations.

  Accordingly, the Company's full year

2016

income tax provision included the impact of recording a total valuation allowance of

$292,000

against all U.S. net deferred tax assets, including the

2016

losses generated, from a U.S. tax perspective.

From a U.S. tax perspective, for the

nine

months ended

September 30, 2017,

the Company increased its valuation allowance for the portion of federal and state net operating losses it estimates to generate in

2017.

One of the Company's foreign subsidiaries is presently under local country audit for alleged deficiencies (totaling approximately

$800,000

plus interest at

20%

per annum) in value-added tax (VAT) and withholding tax for the years

2004

through

2006.

  The Company, in consultation with its legal counsel, believes that there are strong legal grounds that it is

not

liable to pay the majority of the alleged tax deficiencies.  As of

December 31, 2010,

management estimated and reserved approximately

$185,000

in taxes and interest for resolution of this matter and recorded this amount within Selling, General, and Administrative expense in the

2010

Consolidated Statement of Income.  In

2011,

the Company made good faith deposits to the local tax authority under the tax agency's administrative judicial resolution process.  As of

September 30, 2017

and

December 31, 2016,

management's estimated reserve (net of deposits) for this matter is approximately

$171,000

and

$158,000,

respectively.  There has been

no

change in this matter during the

first

nine

months of

2017.