10 .	Income Taxes

The income tax provisions

are comprised of the following:

	Dec. 31 2017			Dec. 31 2016
Current:
Federal	$	(188,549	)	$	448,462
State		(11,964	)		-
Foreign		317,823			203,824
	$	117,310		$	652,286

Deferred
Federal	$	732,895		$	70,223
State		(79,598	)		71,716
Foreign		(59,074	)		(91,348	)
		594,223			50,591
Total Income Tax Provision	$	711,533		$	702,877

The

2017

tax provision includes the impact of changes in deferred taxes of

$0.2

million resulting from the federal rate change from

34%

21%.

The components of the net deferred tax asset at

December 31

are as follows:

	2017			2016
Deferred tax assets:
Federal and state net operating loss carryforwards	$	523,808		$	438,075
Foreign tax credit and other credits		592,993			581,917
Reserves and accruals		271,884			731,655
Unicap 263A adjustment		126,944			170,765
Other deferred tax assets		26,198			17,922
Foreign and VIE net operating loss carryforwards		569,147			541,983
Total gross deferred tax assets		2,110,974			2,482,317

Deferred tax liabilities:
Fixed assets and intangibles		(273,746	)		(740,627	)
Deferred state income tax		(103,055	)		-
Total gross deferred tax liabilities		(376,801	)		(740,627	)
Less: valuation allowance		(631,706	)		(45,000	)
Net deferred tax assets		1,102,467			1,696,690

Deferred Tax Asset Valuation Allowance		2017		201 6
Beginning Balance	$	45,000	$	45,000
Additions charged (credited) to expense	$	586,706	$	-
Balance at end of year	$	631,706	$	45,000

The Company has

a net operating loss carryforward for federal income tax purposes of approximately

$0.4

million which will begin to expire in

2025,

as well as federal tax credits of approximately

$0.6

million which will begin to expire during

2018.

It also has a net operating loss carryforward for state income tax purposes of approximately

$4.5

million, which will begin to expire in

2022.

December 22, 2017,

the U.S. government enacted significant tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act created a separate category of creditable foreign source income related to foreign branches. This

may

operate to prevent cross-crediting of foreign tax credit carryforwards generated by the Company in prior years with those attributable to branch income generated in future years. As a result of this new provision, the U.S. Foreign Tax Credit deferred tax asset has been fully offset by a valuation allowance. The valuation allowance increased by

$0.6

million during the year ended

December 31, 2017,

and was unchanged during the year ended

December 31, 2016.

Income tax provisions differed from the taxes calculated at the statutory federal tax rate as follows:

	Years Ended December 31,
	2017			201 6
Federal Taxes at statutory rate	$	(372,364	)	$	450,464
State income taxes , net of Federal tax effect		(60,695	)		67,768
Nondeductible expenses		35,083			51,741
Foreign taxes		522,803			132,905
Change in valuation allowance		586,706			-
Income tax provision	$	711,533		$	702,877

The Compan

y files tax returns in the U.S.

, and in the U.K,

Germany and Mexico foreign tax jurisdictions and

also in various state jurisdictions

in the U.S.

The tax years

2014

through

2016

remain open to examination.

The Company’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. During the

year ended

December 31,

2017

and

2016,

the Company did

not

recognize expense for interest or penalties, and do

not

have any amounts accrued at

December 31,

2017

and

2016,

as the Company does

not

believe it has any uncertain tax positions.

Tax Reform act of

2017

December 22, 2017,

the SEC issued Staff Accounting Bulletin

No.

118

(SAB

118

) which addresses income tax accounting implications of the Tax Act. The purpose of SAB

118

was to address any uncertainty or diversity of view in applying ASC Topic

740,

Income Taxes in the reporting period in which the Tax Act was enacted. SAB

118

addresses situations where the accounting is incomplete for certain income tax effects of the Tax Act upon issuance of a company

’s financial statements for the reporting period which includes the enactment date. SAB

118

allows for a provisional amount to be recorded if it is a reasonable estimate of the impact of the Tax Act. Additionally, SAB

118

allows for a measurement period to finalize the impacts of the Tax Act,

not

to extend beyond

one

year form the date of enactment. Estimates were used in determining the balances of deferred tax assets and liabilities subject to changes in tax laws included in the Tax Act.