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INCOME TAXES | 12 Months Ended
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Dec. 31, 2012
Income Tax Disclosure [Abstract] |
Note 14. INCOME TAXES | The provision for income taxes as at December 31, are set forth below:
|  | 2012 |  |  | 2011 |
Current |  |  |  |  |  |
Federal |  | $ | 1,093,000 |  |  | $ | - |
Federal AMT |  |  | - |  |  |  | 57,000 |
State |  |  | 354,000 |  |  |  | - |
Total Expense |  |  | 1,447,000 |  |  |  | 57,000 |
Deferred |  |  |  |  |  |  |  |
Federal |  |  | - |  |  |  | - |
State |  |  | - |  |  |  | - |
Total Deferred Taxes |  |  | - |  |  |  | - |
Net Expense for Income Taxes |  | $ | 1,447,000 |  |  | $ | 57,000 |
The following is a reconciliation of our income tax rate computed using the Federal statutory rate to our actual income tax rate as of December 31,
|  | 2012 |  |  | 2011 |
Federal Tax Rate |  |  | 34 | % |  |  | 34 | %
Effect of State taxes |  |  | 8 | % |  |  | 6 | %
Net Operating Loss Carry Forward |  |  | -9 | % |  |  | -40 | %
Federal AMT |  |  | - |  |  |  | 2 | %
Others |  |  | 3 | % |  |  | - |
Total |  |  | 36 | % |  |  | 2 | %
The components of net deferred tax assets as of December 31, are set forth below:
|  | December 31, |  |  | December 31, |
|  | 2012 |  |  | 2011 |
Deferred tax assets: |  |  |  |  |  |
Net operating loss carry forwards |  | $ | - |  |  | $ | 289,000 |
Capital loss carry forwards |  |  | 1,088,000 |  |  |  | 1,088,000 |
Bad debts |  |  | 282,000 |  |  |  | 380,000 |
Stock based compensation - options and restricted stock |  |  | 506,000 |  |  |  | 466,000 |
Capitalized engineering costs |  |  | 447,000 |  |  |  | 356,000 |
Account payable, accrued expenses and reserves |  |  | 9,000 |  |  |  | 9,000 |
Deferred rent |  |  | 423,000 |  |  |  | 390,000 |
Amortization - NTW Transaction |  |  | 138,000 |  |  |  | - |
Inventory - 263A adjustment |  |  | 569,000 |  |  |  | - |
Lease Impairment |  |  | 85,000 |  |  |  | - |
Deferred gain on sale of real estate |  |  | 209,000 |  |  |  | 224,000 |
Section 1231 loss carryover |  |  | 86,000 |  |  |  | 86,000 |
Total deferred tax assets before valuation allowance |  |  | 3,842,000 |  |  |  | 3,288,000 |
Valuation allowance |  |  | (2,269,000 | ) |  |  | (1,217,000 | )
Total deferred tax assets after valuation allowance |  |  | 1,573,000 |  |  |  | 2,071,000 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Property and equipment |  |  | (997,000 | ) |  |  | (801,000 | )
Amortization - Welding Transaction |  |  | (576,000 | ) |  |  | (643,000 | )
Inventory - 263A adjustment |  |  | - |  |  |  | (627,000 | )
Total Deferred Tax Liability |  |  | (1,573,000 | ) |  |  | (2,071,000 | )
Net deferred tax asset |  | $ | - |  |  | $ | - |
Realization of deferred tax assets is dependent on future earnings. Due to the uncertainty of realization of the net deferred tax assets, the Company has provided a valuation allowance. In assessing the realizability of it, management considers whether it is more likely than not that some or perhaps 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. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making the assessment. The valuation allowance at December 31, 2012 and 2011 amounted to $2,269,000 and $1,217,000, respectively. The Company has a capital loss carry forward from the sale of Sigma of $2,719,000 which will expire in fiscal 2015. At December 31, 2012 and 2011, the Company had no material unrecognized tax benefits and no adjustments to liabilities or operations were required. The Company does not expect that its unrecognized tax benefits will materially increase within the next twelve months. The Company recognizes interest and penalties related to uncertain tax positions in interest expense. As of December 31, 2012, the Company has recorded an expense of $22,000 for underpayment penalties. As of December 31, 2011, the Company has not recorded any provisions for accrued interest and penalties related to uncertain tax positions. In certain cases, the Company's uncertain tax positions are related to tax years that remain subject to examination by the relevant tax authorities. The Company files U.S. and state income tax returns in jurisdictions with varying statutes of limitations. The 2009 through 2012 tax years generally remain subject to examination by federal and state tax authorities.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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