Note 5 - Income Taxes

3 Months Ended

Mar. 31, 2020

5 .	Income taxes

During the

three

months ended

March 31, 2020,

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

$452,000

decreasing its valuation allowance against deferred tax assets to

$8.0

million at

March 31, 2020.

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

$34.7

million at

March 31, 2020.

The Company did

not

make any cash payments for income tax in the

three

month periods ended

March 31, 2020

and

2019

due to its net operating loss carryforwards.

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

March 31, 2020,

the Company has

deferred tax assets. As of

December 31, 2019,

the Company had

$247,000

of deferred tax assets. As a result of the CARES Act, the unclaimed portion of the AMT credit which the Company had recorded as a deferred tax asset became a current income tax receivable.

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

three

month period were effectively

due to the change in the valuation allowance.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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