12. INCOME TAXES

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Text Block]

12.      INCOME TAXES

The income tax expense charged to operations for the years ended December 31, were as follows:

	2012			2011			2010
Domestic income tax expense	$	111,000		$	711,000		$	1,473,000
Foreign income tax expense		328,000			33,000			121,000
Deferred tax benefit		(150,000	)		(34,000	)		(114,000	)
Total income tax expense	$	289,000		$	710,000		$	1,480,000

Deferred tax assets, are comprised of the following at December 31:

	2012			2011			2010
Accrued vacation and warranty	$	304,000		$	208,000		$	219,000
Stock compensation additional paid in capital		218,000			160,000			163,000
Accounts receivable and inventory allowances		125,000			113,000			95,000
Intangibles		19,000			-			-
Gross deferred tax assets		666,000			481,000			477,000
Gross deferred tax liability – depreciation		(39,000	)		(69,000	)		(99,000	)
Net deferred tax assets	$	627,000		$	412,000		$	378,000

The realization of the deferred tax assets is dependent on future taxable earnings. The Company has not provided for a deferred tax asset valuation allowance due to their current and anticipated future earnings.

Reconciliation of the amount of reported income tax expense and the amount computed by multiplying the applicable statutory Federal income tax rate is as follows:

	2012			2011			2010
Income before income taxes	$	1,431,800		$	2,230,674		$	4,467,392
Applicable statutory tax rate		34	%		34	%		34	%
Computed “expected” Federal income tax expense		487,000			758,000			1,519,000
Adjustments to Federal income tax resulting from:
State income tax expense		24,000			99,000			267,000
Tax credits and other		(222,000	)		(147,000	)		(306,000	)
Income tax expense	$	289,000		$	710,000		$	1,480,000