NOTE 5 - INCOME TAXES

Historically, the Company generated net operating loss (“NOL”) carryforwards for income tax purposes, which were available for carryforward against future taxable income. As of December 31, 2012, the Company had fully utilized its Federal NOL carryforwards.

The Company’s income tax expense consisted of the following:

	2015		2014
Current:
Federal	$	276,315	$	294,520
State		87,149		83,532
Deferred:
Federal		34,978		(31,524	)
State		27,492		(7,880	)

	$	425,934	$	338,648

The actual tax expense for 2015 and 2014 differs from the "expected" tax expense for those years (computed by applying the applicable United States federal corporate tax rate to income before income taxes) as follows:

	2015			2014

Computed "expected" expense	$	312,511		$	241,129
Permanent differences		41,476			41,612
State and local income tax expense		75,663			49,930
True-up of deferred taxes		(6,126	)		5,977
Other		2,410			--

Income tax expense	$	425,934		$	338,648

The tax effects of temporary differences that give rise to significant portions of the net deferred tax assets/(liabilities) at December 31, 2015 and 2014 are as follows:

	2015			2014
Deferred tax assets:
Stock option expense	$	--		$	29,012
Accrued vacation		68,280			35,378
Mark-to-market		9,510			55,132
Bad debt expense		12,100			--
Deferred rent		1,740			--
Other		14,892			30,866

Total deferred tax assets		106,522			150,388

Deferred tax liabilities:
Stock option expense		(13,221	)		--
Goodwill amortization		(788,308	)		(777,965	)
Fixed asset depreciation		(111,154	)		(116,114	)

Total deferred tax liabilities		(912,683	)		(894,079	)

Net deferred tax liabilities	$	(806,161	)	$	(743,691	)