INCOME TAXES

3 Months Ended

Mar. 31, 2015

Income Taxes

INCOME TAXES

The provision for income taxes at March 31, 2015 and 2014 are set forth below:

	2015			2014
	(unaudited)			(unaudited)
Current
Federal	$	166,000		$	536,000
State		5,000			156,000
Total Expense		171,000			692,000
Deferred Tax Benefit		(147,000	)		(108,000)
Net Provision for Income Taxes	$	24,000		$	584,000

The components of net deferred tax assets as of March 31, 2015 and December 31, 2014 are set forth below:

	March 31,				December 31,
	2015				2014
	(unaudited)
Deferred tax assets:
Current:
Bad debts		$	646,000			$	650,000
Inventory - 263A adjustment			782,000				762,000
Account payable, accrued expenses and reserves			9,000				9,000
Total current deferred tax asset before valuation allowance			1,437,000				1,421,000
Valuation Allowance			-				-
Total current deferred tax asset after valuation allowance		$	1,437,000			$	1,421,000
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			534,000				527,000
Capitalized engineering costs			518,000				522,000
Deferred rent			474,000				483,000
Amortization - NTW Transaction			730,000				663,000
Lease impairment			16,000				22,000
Deferred gain on sale of real estate			175,000				179,000
Other			100,000				-
Total deferred tax assets before valuation allowance			3,639,000				3,488,000
Valuation allowance			(1,092,000	)			(1,092,000	)
Total deferred tax assets after valuation allowance		$	2,547,000			$	2,396,000
Deferred tax liabilities:
Property and equipment		$	(1,013,000	)		$	(1,082,000	)
Goodwill - NTW Transaction			(12,000	)			(11,000)
Goodwill - AMK Transaction			(9,000)				(4,000)
Amortization - Welding Transaction			(424,000	)			(441,000	)
Total Deferred Tax Liability			(1,458,000	)			(1,538,000	)
Net non-current deferred tax asset		$	1,089,000			$	858,000

During the year ended December 31, 2014, the Company determined that it no longer needed to provide a valuation allowance on the net deferred tax assets except for the capital loss and section 1231 loss carryforwards. This was based upon the fact that management believes that the net deferred tax assets are more likely than not to be realized. The valuation allowance at both March 31, 2015 and December 31, 2014 amounted to $1,092,000.

The Company has a capital loss carry forward from the sale of Sigma Metals, Inc., a former subsidiary of the Company, of $2,719,000 which will expire in fiscal 2015.