INCOME TAXES (Tables)

3 Months Ended

Mar. 31, 2014

Series B Convertible Preferred Stock par Value

Provision for income

	2014	2013
	(Unaudited)	(Unaudited)
Current
Federal	$    536,000	$  376,000
State	156,000	113,000
Total Expense	692,000	489,000
Deferred Tax Benefit	(108,000)	-
Net Expense for Income Taxes	$    584,000	$  489,000

Deferred tax assets

	March 31,	December 31,
	2014	2013
	(Unaudited)
Deferred tax assets:
Current:
Bad debts	$         356,000	$       313,000
Inventory - 263A adjustment	749,000	729,000
Account payable, accrued expenses and reserves	9,000	9,000
Total current deferred tax	$     1,114,000	$     1,051,000
Non- Current
Capital loss carry forwards	$     1,088,000	$     1,088,000
Section 1231 loss carry forward	4,000	4,000
Stock based compensation - options and restricted stock	523,000	521,000
Capitalized engineering costs	424,000	503,000
Deferred rent	460,000	453,000
Amortization - NTW Transaction	472,000	475,000
Lease Impairment	43,000	51,000
Deferred gain on sale of real estate	190,000	194,000
Total deferred tax assets before valuation allowance	3,204,000	3,289,000
Valuation allowance	(1,092,000)	(1,092,000)
Total deferred tax assets after valuation allowance	2,112,000	2,197,000
Deferred tax liabilities:
Property and equipment	(1,382,000)	(1,497,000)
Goodwill - NTW Transaction	(8,000)	(7,000)
Amortization - Welding Transaction	(492,000)	(508,000)
Total Deferred Tax Liability	(1,882,000)	(2,012,000)
Net deferred tax asset	$     1,344,000	$     1,236,000