NOTE

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

	December 31, 2017			December 31, 2016
Federal statutory rate applied to income/(loss) before income taxes	$	1,117,014		$	38,740
Increase/(decrease) in income taxes results from:
Current tax expense/(benefit)		1,194			1,069
Nondeductible expenses		(44,845	)		1,078,519
Change in deferred assets		(35,423	)		41,019
Change in valuation allowance		(1,036,746	)		(1,158,278	)

Income tax expense/(benefit)	$	1,194		$	1,069

The components of income tax expense

/(benefit) for the year ended:

	December 31, 2017			December 31, 2016
Current tax expense/(benefit):	$	1,194		$	1,069
Deferred tax expense/(benefit):
Bad debt allowance		11,226			(23,699	)
Operating loss carryforward		1,060,942			1,140,957
Amortization of intangibles		5,482			5,482
Patent litigation settlement		(40,904	)		35,538
		1,037,940			1,159,347
Valuation allowance		(1,036,746	)		(1,158,278	)

Total tax expense/(benefit)	$	1,194		$	1,069

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:

	December 31, 2017			December 31, 2016
Amortization of intangibles	$	261,771		$	267,253
Bad debt allowance		55,436			66,662
Patent litigation liability accrual		169,709			128,804
Impact of the Tax Cuts and Jobs Act		(1,699,440	)		-0-
Operating loss carryforwards		17,973,631			19,034,573
Gross deferred tax assets		16,761,107			19,497,292
Valuation allowance		(16,761,107	)		(19,497,292	)

Net deferred tax liability/(asset)	$	-0-		$	-0-

The Company has net operating loss carry forwards (NOL) for income tax purposes of approximately $

32,543,685.

This loss is allowed to be offset against future income until the year

2037

when the NOL’s 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

December 31, 2017.

The change in the valuation allowance for the year ended

December 31, 2017

was a decrease of

$2,736,185.

The Company's tax returns for the prior

three

years remain subject to examination by major tax jurisdictions.

December 22, 2017,

the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act ("Tax Act"). The Tax Act establishes new tax laws that affect

2018

and future years, including a reduction in the U.S. federal corporate tax rate to

percent effective

January 1, 2018.

For certain deferred tax assets and deferred tax liabilities, we have recorded a provisional change of

$1,699,440,

with a corresponding net adjustment to valuation allowance of

$1,699,440

as of

December 31, 2017.