INCOME TAXES

12 Months Ended

Dec. 31, 2011

INCOME TAXES [Abstract]

INCOME TAXES

13. INCOME TAXES: For the year ended December 31, 2011, the Company utilized net operating loss carry-forwards to offset income taxes except for $87,000 of state income and federal minimum taxes.  For the comparable period in 2010, the Company recorded income tax expense of $13,000 for state income and federal minimum tax expense.   At December 31, 2011 and 2010, the Company has an alternative minimum tax credit of approximately $573,000 with no limitation on the carryforward period. The Company also has federal and state net operating loss carryforwards of approximately $9,000,000 and $7,000,000, respectively, at December 31, 2011.  The net operating loss carry-forwards expire through 2030. Approximately $4,000,000 of federal net operating loss carry-forwards expire at the end of 2012.   The reconciliation of income tax computed at the U.S. federal statutory tax rates to income tax expense is as follows:

December 31,	2011			2010
Tax at U.S. statutory rates		34.0	%		(34.0	%)
State income and federal minimum taxes		3.0	%		-	%
Change in valuation allowance		(36.0	%)		38.0	%
Exercise of stock options		-			(3.0	%)
Other items, net		2.0	%		(1.0	%)
		3.0	%		-

Deferred tax assets (liabilities) are comprised of the following:

December 31,	2011			2010
Alternative minimum tax credit carry-forward	$	573,000		$	573,000
Net operating loss and capital loss carryfowards		3,481,000			7,673,000
Temporary differences in bases of assets and liabilities:
Accounts receivable and inventory		640,000			530,000
Marketable securities		-			14,000
Accrued expenses		133,000			376,000
Stock-based compensation		21,000			72,000
Goodwill		1,420,000			1,640,000
Intangible assets		984,000			1,085,000
Deferred revenue		31,000			62,000
Property and equipment		(40,000	)		(144,000	)
		3,189,000			3,635,000
Total deferred tax assets, net		7,243,000			11,881,000
Valuation allowance		(4,982,000	)		(9,643,000	)
Net deferred tax assets	$	2,261,000		$	2,238,000

The decrease in the valuation allowance in 2011 was principally due to the expiration of net operating loss carryforwards and a change in the Company's projected future profitability.

Deferred income taxes are included in the accompanying balance sheet as follows:

	2011		2010
Current asset	$	527,000	$	391,000
Long-term asset		1,731,000		1,847,000
	$	2,261,000	$	2,238,000