INCOME TAXES

12 Months Ended

Dec. 31, 2015

Notes to Financial Statements

NOTE 16 - INCOME TAXES

The Company follows Accounting Standards Codification subtopic 740, Income Taxes ("ASC 740") which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under such method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to reverse.

The difference between income tax expense computed by applying the federal statutory corporate tax rate and actual income tax expense is as follows:

	2015			2014
Income taxes using U.S. federal statutory rate		34.0	%		34.0	%
State income taxes, net of federal benefit		3.8			(3.8	)%
Prior period provision		0	%		0	%
Stock Expirations		0	%		(61.1	)%
Other		(0.1	)%		(0.1	)%
Change in Valuation Allowance		(37.7	)%		(31.0	)%

The significant components of the deferred tax assets (liabilities) at December 31, 2015 and 2014, are summarized as follows:

	2015			2014
Deferred tax assets:
Stock Based Compensation	$	1,216,472		$	1,121,839
Net Operating Losses		12,251,334			12,640,130
Accrued payroll		218,654			241,854
Intangibles		2,738,614			2,752,414
Other		-			39
Total deferred tax assets		16,425,074			16,886,257
Deferred tax liabilities:
Beneficial Conversion Feature		(40,147	)		(1,975	)
Total deferred tax liabilities		(40,147	)		(1,975	)
Valuation allowance		(16,384,927	)		(16,884,552	)
Net deferred tax assets	$	-		$	-

As of December 31, 2015 and 2014, the Company had U.S. federal and state net operating loss carryforwards of approximately $32.5 million and $32.68 million, respectively, which expire at various dates from 2024 through 2035. These net operating loss carryforwards may be used to offset future taxable income and thereby reduce the Company's U.S. federal income taxes. Section 382 of the Internal Revenue Code of 1986 (the "Code") imposes an annual limit on the ability of a corporation that undergoes a greater than 50% ownership change to use its net operating loss carry forwards to reduce its tax liability. The Company may be subject to a limitation as a result of the Company's initial public offering in 2006 and other transactions related to its stock ownership. These potential limitations could affect the utilization of the carryforwards prior to their expiration.

The Company has provided a full valuation allowance against its net deferred tax assets, since in the opinion of management based upon the earnings history of the Company; it is more likely than not that the benefits of these assets will not be realized.

The Company complies with the provisions of FASB ASC 740-10 in accounting for its uncertain tax positions. ASC 740-10 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely that not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Management has determined that the Company has no significant uncertain tax positions requiring recognition under ASC 740-10.

The Company is subject to income tax in the U.S., and certain state jurisdictions. The Company has not been audited by the U.S. Internal Revenue Service, or any states in connection with income taxes. The periods from December 31, 2013 to December 31, 2015 remain open to examination by the U.S. Internal Revenue Service, and state tax authorities. The periods from December 31, 2005 to December 31, 2012 are subject to examination up to the net operating loss.

The Company recognizes interest and penalties related to unrecognized tax benefits, if incurred, as a component of income tax expense.