NOTE 7. INCOME TAXES –

The income tax provision consists of the following for the years ended December 31:

	2015		2014
Current tax expense	$	7,308	$	196,812
Deferred tax (benefit)		(281,308)		(189,800)
Total income tax expense (benefit)	$	(274,000)	$	7,012

The reconciliation between expected federal income tax rates and the Company’s effective federal tax rates is as follows:

	2015				2014
		Amount	Percent			Amount	Percent
Expected federal tax (benefit)	$	(228,900)	34.0	%	$	13,700	34.0	%
Permanent differences		10,200	(1.5)	%		(7,900)	(19.6)	%
State income tax, net of federal tax benefit		(17,200)	2.6	%		1,300	3.2	%
Foreign tax credit		(19,100)	2.8	%		0	0.0	%
Other		(19,000)	2.8	%		(88)	(0.2)	%
Total	$	(274,000)	40.7	%	$	7,012	17.4	%

The following table summarizes the Company’s deferred tax assets and liabilities at December 31:

	2015		2014
Current deferred tax asset (liabilities):
Accounts payable and accrued expenses	$	132,000	$	61,000
Accounts receivable		(1,572,000)		(1,124,000)
Allowance for doubtful accounts		69,000		38,000
Prepaid expenses		(33,000)		(36,000)
Deferred revenue		607,000		294,053
Net current deferred tax liability		(797,000)		(766,947)
Long-term deferred tax asset
NOL - federal		265,000		0
NOL - State		38,000		7,000
Foreign tax credit		19,000		0
Book - Tax depreciation		9,000		12,000
Net long-term deferred tax asset		331,000		19,000
Net deferred tax liability	$	(466,000)	$	(747,947)

The federal net operating loss carryforward at December 31, 2015 is approximately $777,000 and the various state net operating loss carryforwards is approximately $682,000 which expires between 2025 and 2035 if not used. An allowance for net operating loss carryforward is recorded when the Company believes the amount may not be collected or fully utilized. Management believes the net operating loss carryforward, net of the allowance, is fully collectible or fully utilized.