Note 15 - Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Text Block]

NOTE 15:              INCOME TAXES

A reconciliation of income tax expense and the amount computed by applying the statutory federal income tax rate to the income before provision for income taxes is as follows

	December 31, 2012			December 31, 2011
Statutory rate applied to loss before income taxes	$	(2,923,533	)	$	(1,326,210	)
Increase (decrease) in income taxes results from:
Current tax expense/(benefit)		63,814			-0-
Nondeductible expenses		2,509,532			529,790
Change in deferred assets		82,209			119,214
Other		-0-			(4,190	)
Change in valuation allowance		331,792			681,396
Income tax expense (benefit)	$	63,814		$	-0-

The components of income tax expense (benefit) for the years ended:

	December 31, 2012			December 31, 2011
Current tax expense (benefit):
Income tax at statutory rates	$	63,814		$	-0-
Deferred tax expense (benefit):
Bad debt allowance		21,913			47,950
Operating loss carry forward		(435,914	)		(848,561	)
Patent litigation settlement		82,209			119,215
		(331,792	)		(681,396	)
Valuation allowance		331,792			681,396
Total tax expense (benefit)	$	63,814		$	-0-

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. Significant components of our deferred tax assets and liabilities are as follows:

	December 31, 2012			December 31, 2011
Amortization of intangibles	$	283,698		$	283,698
Bad debt allowance		30,715			52,629
Patent litigation liability accrual		386,682			468,891
Operating loss carry forwards		17,355,970			16,920,055
Gross deferred tax assets		18,057,065			17,725,273
Valuation allowance		(18,057,065	)		(17,725,273	)
Net deferred tax asset	$	-0-		$	-0-

The Company has net operating loss carry forwards (NOL) for income tax purposes of approximately $48,368,795.  This loss is allowed to be offset against future income until the year 2032 when the NOL’s will expire.  Other timing differences relate to depreciation and amortization for the stock acquisition of Education Navigator in 1998.  The tax benefits relating to all timing differences have been fully reserved for in the valuation allowance account due to the substantial losses incurred through December 31, 2012.  The change in the valuation allowance for the year ended December 31, 2012 was an increase of $331,792. The Company's tax returns for the prior three years remain subject to examination by major tax jurisdictions.