Income Taxes

12 Months Ended

Nov. 30, 2011

Notes to Financial Statements

Income Taxes

5. Income Taxes

At November 30, 2011, the Company had net operating loss carryforwards for Federal income tax purposes of approximately $34,000,000 expiring in the years of 2012 through 2031. Utilization of the net operating losses may be subject to annual limitations provided by Section 382 of the Internal Revenue Code and similar State provisions.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of November 30, 2011 and 2010 were as follows:

	2011		2010
Deferred tax assets, net:
Net operating loss carryforwards	$	12,420,000	$	11,550,000
Allowance for doubtful accounts		20,000		50,000
Stock based compensation		120,000		300,000
Accrued pension		550,000		470,000
Property, plant and equipment		—		60,000
Interest		1,280,000		810,000
Other		110,000		220,000
		14,500,000		13,460,000
Valuation allowance		14,500,000		13,460,000
Net deferred assets	$	—	$	—

The valuation allowance increased to $14,500,000 at November 30, 2011 from $13,460,000 at November 30, 2010.

The following is a reconciliation of the tax provisions for the years ended November 30, 2011 and 2010 with the statutory Federal income tax rates:

	Percentage of Pre-Tax Income
	2011			2010
Statutory Federal income tax rate		(34.0	)%		(34.0	)%
Loss generating no tax benefit		34.0			34.0
		—			—

The Company did not have any material unrecognized tax benefits as of November 30, 2011 and 2010. The Company does not expect the unrecognized tax benefits to significantly increase or decrease within the next twelve months.  The Company recorded no interest and penalties relating to unrecognized tax benefits as of and during the years ended November 30, 2011 and 2010. The Company is subject to U.S. federal income tax, as well as taxes by various state jurisdictions. The Company is currently open to audit under the statute of limitations by the federal and state jurisdictions for the years ending November 30, 2008 through 2011.