Note 9 - Income Taxes

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note

9.

Income Taxes

Deferred income taxes reflect the net tax effect 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 the Company’s deferred tax assets and liabilities are as follows at

December

31

 :

	2016			2015
Deferred tax assets:
Net operating loss carryforwards	$	13,676,000		$	13,500,000
Depreciation		313,000			90,000
Non-cash compensation		279,000			370,000
Other		23,000			-
Valuation Allowance		(12,670,000	)		(12,339,000	)
Deferred tax asset	$	1,621,000		$	1,621,000

Management has reviewed its net deferred asset position, and due to the history of operating losses has determined that the application of a valuation allowance at

December

31,

2016

and

December

31,

2015

is warranted. If applicable, the Company would recognize interest expense and penalties related to uncertain tax positions in interest expense. As of

December

31,

2016,

the Company had not accrued any interest or penalties related to uncertain tax provisions.

The Company has net operating loss carryforwards for tax purposes of approximately

$40.2

million that begin to expire in the year

2020.

Approximately

$0.1

million of the total net operating loss is subject to an IRS Section

382

limitation from

1999.

The tax provision for federal and state income tax is as follows for the year ended

December

31:

	2016		2015
Current provision:
Federal	$	-	$	32,369
State		32,668		42,916
		32,668		75,285
Deferred provision:
Federal (benefit)		-		-
(Benefit) expense for income taxes	$	32,668	$	75,285

The reconciliation of federal income tax computed at the U.S. federal statutory tax rates to total income tax expense (benefit) is as follows for the year ended

December

31:

	2016		2015
Income tax expense (benefit) at 34%	$	(407,000)	$	361,000
Change in valuation allowance		331,000		93,000
Permanent and other differences		76,000		(454,000	)
Alternative minimum tax and Texas margin tax		32,668		75,285
Income tax expense (benefit)	$	32,668	$	75,285