Note 5. Income taxes

6 Months Ended

Jun. 30, 2015

Income Tax Disclosure [Abstract]

Income taxes

We recognized income tax benefits of $8,973 and $172,394 during the three and six-month periods ended June 30, 2015, respectively.  We recognized income tax benefit (expense) of $49,631 and ($379) during the three and six-month periods ended June 30, 2014, respectively.  The variation between the Company’s estimated annual effective tax rate and the US Statutory rate of 34% is due primarily to state income taxes, non-deductible expenses related to stock compensation, foreign rate differentials, and non-cash interest.

During the six-month period ended June 30, 2015, the Company released a portion of its valuation allowance related to federal and state net operating losses, which resulted in a net benefit of $210,370.  The tax benefits from US net operating losses that were previously reserved were acquired as part of the acquisition of PrecisionIR (PIR).  At the date of acquisition, management believed it was more likely than not that the benefits would not be used due to the uncertainty of future profitability and also due to statutory limitations on the amount of net operating losses that can be carried forward in an acquisition.  During the three-month period ended March 31, 2015, the Company performed a detailed analysis to determine its ability to utilize the tax benefits and determined that portions of the tax benefits could be used.  Therefore, the Company released portions of the reserve related to tax years through 2015 based on current best estimates of profitability.  The remaining reserve will be evaluated each quarter based on projections of future profitability as new services and initiatives are rolled out.