Note 6 - Income Taxes

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Income Tax Disclosure [Text Block]

6 . Income taxes

During the

first

six

months of

2018,

we recorded a non-cash charge to our valuation allowance of

$368,000

increasing our valuation allowance against deferred tax assets to

$10.0

 million at

June 30, 2018.

The primary assets covered by this valuation allowance are net operating losses, which are approximately

$35.5

million at

June 30, 2018.

The Company did

not

make any cash payments for income tax in the current

three

and

six

month period ended

June 30, 2018

and prior year

three

and

six

month period ended

July 1, 2017

due to our net loss. During the current

three

month period, we recorded a

$231,000

decrease in tax positions of prior years’ related to our unrecognized tax benefits position under FIN

48.

We maintain a valuation allowance against deferred tax assets that currently exceed our deferred tax liabilities. The primary assets covered by this valuation allowance are net operating loss carry-forwards. The valuation allowance was calculated in accordance with the provisions of ASC

740,

Income Taxes

, which requires an assessment of both positive and negative evidence when measuring the need for a valuation allowance. Our results over the most recent

three

-year period were heavily affected by our business restructuring activities. Our cumulative loss, excluding income from the Continued Dumping and Subsidy Offset Act, in the most recent

three

-year period, in our view, represented sufficient negative evidence to require a valuation allowance under the provisions of ASC

740,

Income Taxes

. We intend to maintain a valuation allowance until sufficient positive evidence exists to support its reversal, resulting in

no

deferred tax asset balance being recognized. Should we determine that we will

not

be able to realize all or part of our deferred tax asset in the future, an adjustment to the deferred tax asset will be charged to income in the period such determination is made.

Our effective tax rate for the current and prior year

three

and

six

month periods were effectively

0%

due to our net loss.