(

)

Income Taxes

Total income tax expense (benefit) for the

2019

and

2018

fiscal years consists of the following:

	November 30, 2019			November 30, 2018
Current Expense (benefit)	$	4,392		$	127,673
Deferred expense (benefit)		(353,626	)		(654,413	)
	$	(349,234	)	$	(526,740	)

The reconciliation of the statutory Federal income tax rate is as follows:

	November 30, 2019			November 30, 2018
Statutory federal income tax rate		21.0	%		21.0	%
Valuation allowance on foreign net operating loss		-			(1.4	)
Revaluation of deferred tax asset		-			(7.6	)
Permanent Differences and Other		(1.3	)		1.5
		19.7	%		13.5	%

Tax effects of temporary differences that give rise to significant portions of the deferred tax assets (liabilities) at

November 30, 2019

and

2018

are presented as approximate amounts below:

	November 30
	2018			2018
Current deferred tax assets (liabilities):
Accrued expenses	$	100,000		$	59,000
Inventory capitalization		21,000			73,000
NOL and tax credit carryforward		1,182,000			826,000
Asset reserves		621,000			609,000
Total current deferred tax assets	$	1,924,000		$	1,567,000
Non-current deferred tax assets
Property, plant, and equipment	$	(138,000	)	$	(135,000	)
Total non-current deferred tax assets (liabilities)	$	(138,000	)	$	(135,000	)
Net deferred taxes	$	1,786,000		$	1,432,000

In assessing the realizability of deferred tax assets, management considers whether it is more likely than

not

that some portion or all of the deferred tax assets will

not

be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company’s net operating loss amounting to approximately

$5,033,000

and tax credit carryforward amounting to approximately

$109,000

for its U.S. operations expire on

November 30, 2036,

2037,

2038

and

2039.

Management believes that the Company will be able to utilize the U.S. net operating losses and credits before their expiration.

December 22, 2017,

the Tax Cuts and Job Act of

2017

was enacted, which reduced the top corporate income tax rate from

35%

21%.

The application of this new rate was recognized in the

first

quarter of the

2018

fiscal year. Tax expense from continuing operations includes an adjustment of approximately

$298,000

related to the revaluation of the Company’s net deferred tax asset at the new statutory rate.