INCOME TAXES

12 Months Ended

Oct. 31, 2011

INCOME TAXES [Text Block]

5. INCOME TAXES

Significant components of the Company’s deferred asset/(liability) as of October 31, 2011 and 2010 include differences in depreciation methods, inventory valuation allowance and net operating loss carryforward:

		2011			2010
Total Gross Deferred Tax assets	$	3,368,000		$	4,179,000
Less - Valuation Allowance		(3,368,000	)		(4,179,000	)
Net Deferred Tax Assets	$	0		$	0
Total Gross Deferred Tax Liability	$	0		$	0
Net Deferred Tax Asset (Liability)	$	0		$	0

Actual income tax (benefit) expense differs from the “expected” tax expense computed by applying the U.S. federal corporate tax rate of 34% to income(loss) before income taxes as follows:

		2011			2010
Computed Expected Tax (Benefit)Expense	$	(228,000	)	$	(201,000	)
Change in Valuation Allowance		228,000			201,000
Other		0			0
	$	0		$	0

At October 31, 2011, the Company has net operating loss carryforwards of approximately $9,116,000 that expire through 2031. For financial statement purposes, a valuation allowance has been provided to offset the net deferred tax assets due to the cumulative net operating losses incurred during recent years. Such allowance increased (decreased) by approximately $(222,000)and $(609,000) during the years ended October 31, 2011 and 2010, respectively. The valuation allowance will be reduced when and if, in the opinion of management, significant positive evidence exists which indicates that it is more likely than not that the Company will be able to realize its deferred tax assets.