INCOME TAXES

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

INCOME TAXES

The Company is subject to taxation in the United States and Massachusetts. The provision for income taxes for the years ended December 31, 2015 and 2014 are summarized below:

	December 31,			December 31,
	2015			2014
Current:
Federal	$	-		$	-
State		975			2,430
Total current		975			2,430
Deferred:
Federal		571,125			(846,000	)
State		(372,409	)		(424,000	)
Change in valuation allowance		(198,716	)		1,270,000
Total deferred		-			-
Income tax provision (benefit)	$	975		$	2,430

A reconciliation of income taxes computed by applying the statutory U.S. income tax rate to the Company’s loss before income taxes to the income provision is as follows:

	December 31,			December 31,
	2015			2014
U.S. federal statutory tax rate		34.00	%		34.00	%
State tax benefit, net		(0.02	)%		(0.04	)%
Gain on stock price guarantee		-			-
Other		(0.02	)%		(0.24	)%
Valuation allowance		(33.99	)%		(33.92	)%
Effective income tax rate		(0.03	)%		(0.20	)%

Deferred tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  Significant components of the Company’s deferred tax assets are as follows:

	December 31,			December 31,
	2015			2014
Deferred tax assets:
NOL's	$	16,247,000		$	16,311,000
State taxes		(308,800	)		(435,000	)
Inventory and other reserves		42,800			194,000
Depreciation and amortization		6,600			1,000
Change in value of stock		435,100			238,000
NQ stock option expense		736,700			674,000
Total deferred tax assets		17,159,400			16,983,000
Valuation allowance		(17,159,400	)		(16,983,000	)
Net deferred tax assets	$	-		$	-

Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by approximately $176,400 in 2015.

As of December 31, 2015, the Company had net operating loss carryforwards for federal income tax purposes of approximately $46,000,000 which expire beginning in the year 2019. As of December 31, 2015, the Company had net operating loss carryforwards for state income tax purposes of approximately $8,000,000 which expire beginning in the year 2015.

Utilization of the net operating losses may be subject to substantial annual limitation due to federal and state ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such annual limitations could result in the expiration of the net operating losses ad credits before their utilization. The Company has not performed an analysis to determine the limitation of the net operating loss carryforwards.