Note 15 - Income Taxes

9 Months Ended

Sep. 30, 2013

Income Tax Disclosure [Abstract]

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:

	September 30, 2013			September 30, 2012
Federal statutory rate applied to loss before income taxes	$	(1,662,692	)	$	(2,327,610	)
Increase/(decrease) in income taxes results from:
Current tax expense		48,599			54,699
Non deductible expenses		1,144,767			1,961,459
Change in deferred assets		37,086			62,632
Change in valuation allowance		480,839			303,519
Income tax expense	$	48,599		$	54,699

The components of income tax expense (benefit) for the nine month periods ended:

	September 30, 2013			September 30, 2012
Current tax expense:	$	48,599		$	54,699
Deferred tax expense/(benefit):
Bad debt allowance		13,106			(47,701	)
Operating loss carryforward		(531,031	)		(318,450	)
Patent litigation settlement		37,086			62,632
		(480,839	)		(303,519	)
Valuation allowance		480,839			303,519
Total tax expense	$	48,599		$	54,699

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:

	September 30, 2013			September 30, 2012
Amortization of intangibles	$	283,698		$	283,698
Bad debt allowance		17,608			100,330
Patent litigation liability accrual		349,596			401,020
Operating loss carryforwards		17,887,001			17,238,505
Gross deferred tax assets		18,537,904			18,023,553
Valuation allowance		(18,537,904	)		(18,023,553	)
Net deferred tax liability/(asset)	$	-0-		$	-0-

The Company has net operating loss carryforwards (NOL) for income tax purposes of approximately $49,779,986. This loss is allowed to be offset against future income until the year 2033 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 September 30, 2013. The change in the valuation allowance for the nine month period ended September 30, 2013 was an increase of $480,839.