Income taxes

12 Months Ended

Oct. 31, 2012

Income Tax Disclosure [Abstract]

Income taxes

Note 6 - Income taxes

The provision (benefit) for income taxes consists of the following:

	2012			2011
Current:
Federal	$	1,330,935		$	318,148
State		314,863			43,744
		1,645,798			361,892
Deferred:
Federal		(141,892	)		24,540
State		(3,419	)		(7,600	)
		(145,311	)		16,940
Totals	$	1,500,487		$	378,832

Income tax at the Federal statutory rate is reconciled to the Company's actual net provision for income taxes as follows:

	2012						2011
	Amount			% of Pretax Income			Amount			% of Pretax Income
Income tax at Federal statutory rate	$	1,397,891			34.0	%	$	392,500			34.1	%
State tax provision, net of Federal tax benefit		229,928			5.6			23,855			2.1
Nondeductible differences:
ISO stock options, net		7,182			0.2			16,297			1.4
Business acquisition costs		-			-			131,504			11.4
Qualified domestic production deduction		(46,121	)		(1.1	)		-			-
Other		36,252			0.9			-			-
Uncertain tax positions		(79,223	)		(1.9	)		(116,284	)		(10.1	)
R&D credit		-			-			(86,166	)		(7.5	)
Other		(45,422	)		(1.2	)		17,126			1.5
Provision for income taxes	$	1,500,487			36.5	%	$	378,832			32.9	%

The Company's total deferred tax assets and deferred tax liabilities at October 31, 2012 and 2011 are as follows:

	2012			2011
Current Assets:
Allowance for doubtful accounts	$	37,500		$	40,000
Inventory obsolescence		65,700			58,600
Accrued vacation		154,000			114,100
State income taxes		118,400			19,700
Stock based compensation awards		235,600			209,600
Section 263A costs		128,800			132,800
Other		20,966			35,900
Total current assets		760,966			610,700
Long-Term Assets:
Amortization / intangible assets		103,400			116,900
Long-Term Liabilities:
Amortization / intangible assets		(799,400	)		(880,600	)
Depreciation / equipment and furnishings		(381,157	)		(308,500	)
Net long-term deferred tax liabilities		(1,077,157	)		(1,072,200	)
Total deferred tax liabilities	$	(316,191	)	$	(461,500	)

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follow:

Balance at November 1, 2010	$	216,171
Lapse of statute of limitations- tax positions in prior period		(136,948	)
Balance at October 31, 2011		79,223
Lapse of statute of limitations - tax positions in prior period		(79,223	)
Balance at October 31, 2012	$	-

The Company had no gross liability for unrecognized tax benefits at October 31, 2012. At October 31, 2011 the Company’s total gross liability for unrecognized tax benefits was $79,223, including $18,947 of interest and penalties.

During the year ended October 31, 2012, a reduction of $18,947 of interest was a result of the expiration of the statute of limitations. As of October 31, 2012, $0 of accrued interest and penalties were included in other long-term liabilities in the balance sheet. As of October 31, 2011, $18,947 of accrued interest and penalties were included in other long-term liabilities in the balance sheet.

The Company is currently not undergoing any tax examinations. Tax fiscal years ended October 31, 2008 through October 31, 2012 remain subject to examinations.