Note 15 - Income Taxes

9 Months Ended

Sep. 30, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE 15: INCOME TAXES

A reconciliation of income tax expense and the amount computed by applying the statutory federal income tax rate to the income before provision for income taxes is as follows:

	September 30, 2014			September 30, 2013
Federal statutory rate applied to income/(loss) before income taxes	$	165,693		$	(1,662,692	)
Increase/(decrease) in income taxes results from:
Current tax expense		35,407			48,599
Non deductible expenses		(1,482,741	)		1,144,767
Change in deferred assets		49,571			37,086
Change in valuation allowance		1,267,477			480,839
Income tax expense	$	35,407		$	48,599

The components of income tax expense/(benefit) for the nine month periods ended:

	September 30, 2014			September 30, 2013
Current tax expense	$	35,407		$	48,599
Deferred tax expense/(benefit):
Bad debt allowance		(28,837	)		13,106
Operating loss carryforward		(1,288,211	)		(531,031	)
Amortization of intangibles		4,111			-0-
Patent litigation settlement		45,460			37,086
		(1,267,477	)		(480,839	)
Valuation allowance		1,267,477			480,839
Total tax expense	$	35,407		$	48,599

Deferred income taxes 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 our deferred tax assets and liabilities are as follows:

	September 30, 2014			September 30, 2013
Amortization of intangibles	$	279,587		$	283,698
Bad debt allowance		52,452			17,608
Patent litigation liability accrual		269,948			349,596
Operating loss carryforwards		19,508,693			17,887,001
Gross deferred tax assets		20,110,680			18,537,903
Valuation allowance		(20,110,680	)		(18,537,903	)
Net deferred tax liability/(asset)	$	-0-		$	-0-

The Company has net operating loss carry forwards (NOL) for income tax purposes of approximately $54,089,558. This loss is allowed to be offset against future income until the year 2034 when the NOLs will expire. Other timing differences relate to depreciation and amortization for the stock acquisition of Education Navigator in 1998. The tax benefits relating to all timing differences have been fully reserved for in the valuation allowance account due to the substantial losses incurred through September 30, 2014. The change in the valuation allowance for the nine month period ended September 30, 2014 was an increase of $1,267,477.