13. INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income tax reconciliation

The Company’s tax expense differs from the “expected” tax expense for Federal income tax purposes, (computed by applying the United States Federal tax rate of 34% to loss before taxes), as follows:

	Year ended December 31,
	2013			2012
Computed “expected” tax expense (benefit)	$	(949,929	)	$	(843,193	)
State taxes, net of federal benefit		(173,132	)		(180,827	)
Goodwill impairment and other non-deductible items		76,599			(155,420	)
Change in deferred tax asset valuation allowance		1,048,062			1,181,188
Income tax expense	$	1,600		$	1,748

Deferred tax assets and liabilities

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. The effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities at December 31 are as follows:

	2013			2012
Deferred tax assets:
Accrued vacation	$	–		$	12,430
Accrued salaries		–			27,386
Charitable contributions		4,128			2,731
Reserve for bad debt		30,006			18,684
Stock options		4,411,279			4,237,988
Inventory Adjustment		3,326			–
Other		7,502			3,751
Net operating loss carryforward		6,183,779			5,193,118
Total gross deferred tax assets		10,640,020			9,496,088
Less: Deferred tax asset valuation allowance		(10,528,703	)		(9,480,641	)
Total net deferred tax assets		111,317			15,447
Deferred tax liabilities:
Depreciation		(111,317	)		(15,447	)
Total deferred tax liabilities		(111,317	)		(15,447	)
Total net deferred taxes	$	–		$	–