Note 4 - Income Taxes

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Note 4 – Income Taxes

The income tax provision is comprised of the following for the years ended December 31:

	2013			2012
Current state tax expense	$	1,393		$	28,675
Deferred federal tax expense (benefit)		(59,000	)		(2,000	)
Income tax expense (benefit)	$	(57,607	)	$	26,675

The reconciliation between the statutory federal income tax rate and the Company’s effective tax rate is as follows:

	2013			2012
Federal statutory rate		34.0	%		34.0	%
State taxes		(0.5	)		7.4
Nondeductible/Nontaxable Items		(8.3	)		7.0
Change in federal valuation allowance asset		2.9			(37.9	)
Effective tax rate		28.1	%		10.5	%

Total available net operating loss carry forwards at December 31, 2013 are reflected in the following schedule:

Year of Expiration	Available for Federal Tax Purposes
2019	$	306,757
2021		76,872
2022		40,330
2023		106,651
2033		183,310
	$	713,920

During 2013, the Company generated federal net operating loss carryforwards of approximately $180,000. The Company’s valuation allowance associated with the related deferred tax assets was increased by approximately $7,000 in 2013 and decreased by approximately $109,000 in 2012.  The change in our valuation allowance for 2013 and 2012 was attributable to the expected profitability on contracts being fulfilled as of the end of each period.

  Deferred tax assets consist of the following as of December 31:

	2013			2012
Deferred tax asset:
Fixed assets and other	$	108,137		$	122,148
Net operating loss carryforwards		252,878			180,407
Research and development credit		12,041			4,802
Valuation allowance		(291,056	)		(284,357	)
Net deferred tax asset	$	82,000		$	23,000

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 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 both positive and negative evidence in making this assessment, including the future reversal of existing temporary taxable differences, projected future taxable income, the recent expiration of unused net operating losses and tax planning strategies.  Due to the Company’s inability to project future taxable income over the periods in which the deferred tax assets may become deductible, management does not believe it is more likely than not that the Company will realize the entire benefit of its deferred tax assets. As a result, management believes the maintenance of a valuation allowance is required at December 31, 2013 against that portion of the Company’s net deferred tax asset that may not be realized.

The Company continues to analyze its income tax positions and no significant income tax uncertainties were identified in 2013 and 2012. Therefore, the Company recognized no adjustment for unrecognized tax benefits for the years ended December 31, 2013 and 2012. The Company is not currently under examination by the Internal Revenue Service. The United States federal statute of limitations remains open for the years 2010 onward. State income tax returns are generally subject to examination for a period of three to five years after filing of the respective return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states. The Company is not currently under examination in any state jurisdictions. The Company is no longer subject to federal or state income tax assessments for years prior to 2007.