Annual report pursuant to section 13 and 15(d)

INCOME TAXES

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INCOME TAXES
 12 Months Ended
Dec. 31, 2012
Income Tax Disclosure [Abstract]  
INCOME TAXES

 

The components of the provision (benefit) consist of the following:

 

    2012
  Current:          
  Federal     $ (51,655 )
             
  Deferred:          
  Federal       (290,168 )
  Total     $ (341,823 )

 

The income tax provision (benefit) differs from that computed using the federal statutory rate applied to income before taxes as follows:

 

    2012
Tax provision/(benefit) computed at the federal statutory rate   $ 97,966  
Allowance for doubtful accounts     (737 )
Inventories     1,021  
Employee benefits     (1,688 )
Share based compensation     6,616  
Fixed assets     10,434  
Intangible assets     35,651  
Permanent items     5,570  
Research and development credit     11,639  
Net operating loss     (166,472 )
Valuation allowance     (341,823 )
Income tax provision (benefit)   $ (341,823 )

 

Significant components of our deferred tax assets and liabilities as of December 31, 2012 are shown below.

 

    2012
Deferred Tax Assets:        
Allowance for doubtful accounts   $ 15,478  
Inventories     11,513  
Employee benefits     17,832  
Share based compensation     6,616  
Fixed assets     47,949  
Foreign tax credits     48,986  
General business credits     31,802  
Net operating losses     255,982  
Other     736  
Total deferred tax assets before valuation allowance     436,894  
Valuation allowance     (48,986 )
Total deferred tax assets     387,908  
         
Deferred Tax Liabilities:        
Fixed assets     10,434  
Intangible assets     35,651  
Total deferred tax liabilities     46,085  
Net deferred tax assets   $ 341,823  

 

We have a previous net operating loss carry-forward of approximately $1,207,000. Any income will be netted against this loss carry-forward, with the remainder to be used through the year 2028 to offset future taxable income. The cumulative net operating loss carry-forward for income tax purposes may differ from the cumulative financial statement loss due to permanent differences and timing differences between book and tax reporting. Additionally, we have a foreign tax credit carry-forward of approximately $49,000 that can be used in the future to offset federal income tax owed.

 

We periodically review the need for a valuation allowance against deferred tax assets based upon earnings history and trends.