INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2017

INCOME TAXES

Schedule of components of income tax expense

	2017		2016
Current:
Federal	$	(5,000)	$	(72,000)
State		9,000		7,000
		4,000		(65,000)
Deferred  -  Federal		(302,000)		61,000
	$	(298,000)	$	(4,000)

Schedule of expected provision for income taxes, computed by applying the U.S. federal income tax rate to income before taxes, reconciled to income tax expense

	2017		2016
Expected provision for federal income taxes	$	(178,000)	$	(23,000)
State income taxes, net of federal benefit		2,000		7,000
Non-deductible meals, entertainment, and life insurance		29,000		27,000
Research and development credit		(38,000)		(32,000)
Change in valuation allowance		16,000		15,000
Tax rate change adjustment related to Tax Reform Act		(115,000)		-
Prior year true-ups and other		(14,000)		2,000
	$	(298,000)	$	(4,000)

Schedule of components of net deferred tax liabilities

	2017		2016
Deferred tax liabilities:
Accrued vacation	$	19,000	$	32,000
Inventories reserve		46,000		66,000
Allowance for doubtful accounts		2,000		4,000
Allowance for sales returns		9,000		15,000
Research and development credit carryforward		131,000		77,000
Accrued self-insured medical		1,000		3,000
Property and equipment		(242,000)		(499,000)
Intangible assets		(65,000)		(92,000)
Net operating loss		40,000		-
Other		6,000		8,000
Valuation allowance		(91,000)		(60,000)
Net deferred tax liabilities	$	(144,000)	$	(446,000)