Note 6 - Income Taxes

9 Months Ended

Sep. 30, 2019

6 .	Income taxes

During the

nine

months ended

September 30, 2019,

the Company recorded a non-cash reversal to its valuation allowance of

$15,000

decreasing its valuation allowance against deferred tax assets to

$8.5

million at

September 30, 2019.

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

$33.7

million at

September 30, 2019.

The Company did

not

make any cash payments for income tax in the

three

and

nine

month periods ended

September 30, 2019

and

2018

due to its net operating loss.

The Company maintains 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. The Company’s results over the most recent

four

-year period were heavily affected by business restructuring activities. The Company’s cumulative loss represented sufficient negative evidence to require a valuation allowance. The Company intends to maintain a valuation allowance until sufficient positive evidence exists to support its reversal, resulting in

deferred tax asset balance being recognized. Should the Company determine that it will

not

be able to realize all or part of its 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.

As of

September 30, 2019

and

December 31, 2018,

the Company’s deferred tax asset balance is

$247,000

and

$494,000,

respectively.

The Company’s effective tax rate for the current and prior year

three

and

nine

month periods were effectively

due to net operating loss carryforwards.