Note 11 - Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Text Block]

11.     Income Taxes

The provision for income taxes consisted of the following:

	For the Years Ended December 31,
	2012			2011
Current	$	336,000		$	493,000
Deferred		(6,000	)		55,000
	$	330,000		$	548,000

Deferred income tax assets (liabilities) consisted of the following:

	December 31,
	2012			2011
Current deferred income taxes:
Foreign tax credits	$	67,000		$	92,000
Temporary differences:
Inventory reserve		121,000			103,000
Intangible assets		-			3,000
State income taxes		(13,000	)		(10,000	)
Accrued expenses and inventory		379,000			368,000
Current deferred income tax assets, net		554,000			556,000
Non-current deferred income taxes:
Temporary differences:
Property and equipment		(760,000	)		(778,000	)
Other		(14,000	)		-
State income taxes		(39,000	)		(29,000	)
Non-current deferred tax liabilities		(813,000	)		(807,000	)
Net deferred income tax liability	$	(259,000	)	$	(251,000	)

The provision for income taxes differs from the amount that would be obtained by applying the U.S. statutory rate to income before income taxes as a result of the following:

	For the Years Ended December 31,
	2012			2011
Income taxes based on U.S. statutory rate of 34%	$	444,000		$	504,000
Non-deductible meals and entertainment		4,000			4,000
Domestic manufacturer's deduction		(21,000	)		(33,000	)
Foreign taxes		(172,000	)		-
State taxes		42,000			32,000
Other		33,000			41,000
	$	330,000		$	548,000

In 2012, the Company modified its tax reporting for Harmony, which lowered the Company’s effective tax rate for the year ended December 31, 2012.  The Company has recorded an uncertain tax position liability of approximately $342,000 as of December 31, 2012, which is included in accrued liabilities in the accompanying 2012 consolidated balance sheet.

Unrecognized tax benefits during the year ended December 31, 2012 were the following:

Balance as of January 1, 2012	$	-
Gross increase from tax positions taken during 2012		28,000
Gross increase from tax positions taken during prior periods		314,000
Reductions to unrecognized tax benefits		-
Balance as of December 31, 2012	$	342,000