6. Income Taxes

The Company accounts for income taxes under ASC Topic 740: “Income Taxes.” Under ASC 740, the deferred tax provision is determined using the liability method, whereby deferred tax assets and liabilities are recognized based upon temporary differences between the financial statement and income tax bases of assets and liabilities using presently enacted tax rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. In the quarter ended September 30, 2017 the Company recorded the tax benefit of losses incurred during the current quarter in the amount of approximately $292,000. As the realization of the tax benefit of the net operating loss is not assured an additional valuation allowance of approximately $292,000 was recorded. In the quarter ended September 30, 2016 the Company recorded the tax benefit of losses incurred in the amount of approximately $306,000. As the realization of the tax benefit of the net operating loss is not assured an additional valuation allowance of approximately $306,000 was recorded. The total valuation allowance recorded by the Company as of September 30, 2017 and 2016 was approximately $2,845,000 and $2,119,000, respectively. To the extent that the Company’s losses continue in future quarters, the tax benefit of those losses will be subject to a valuation allowance.