INCOME TAXES

The reconciliation of income tax computed at the Federal statutory rate to the provision for income taxes from continuing operations is as follows:

	Year Ended September 30,
	2015		2014

Federal taxes (credits) at statutory rates	$	217,000	$	(214,000)
Permanent differences		17,000		10,000
State and local taxes, net of Federal benefit		24,000		30,000
Prior Year Under accrual		81,000		-
Change in valuation allowance		(189,000)		196,000
	$	150,000	$	22,000

The components of deferred income tax are as follows:

Net operating loss carryforwards	$	2,800,000	$	2,914,000
Amortization differences		(75,000)		-
Valuation allowance		(2,725,000)		(2,914,000)
Net deferred tax asset	$	-	$	-

During the fiscal years ended September 30, 2015 and 2014, the Company recorded a valuation allowance against deferred tax assets in the amount of ($189,000) and $196,000, respectively, as the result of an evaluation of the Company’s deferred tax assets. The Company assessed the likelihood that its deferred tax assets would be recovered from future taxable income and determined that recovery was not more likely than not based upon all available evidence, both positive and negative. The amount of the non-cash valuation allowance reduction was based on management’s estimates of future taxable income by taking jurisdictions and the period over which the Company believes deferred tax assets will be recoverable.

The Company has net operating loss carryforwards for income tax purposes which expire as follows:

2032	$	1,288,000
2033		5,605,000
2034		630,000
	$	7,523,000