INCOME TAXES

9 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

14. INCOME TAXES

The components of the provision for income tax expense are as follows for the three months ended:

	September 30, 2012			September 30, 2011
Current taxes
Federal	$	—		$	—
State		—			—
Current taxes		—			—
Change in deferred taxes		840,909			(851,594	)
Change in valuation allowance		(818,060	)		889,486
Provision for income tax expense	$	22,849		$	37,892

The components of the provision for income tax expense (benefit) are as follows for the nine months ended:

	September 30, 2012			September 30, 2011
Current taxes
Federal	$	—		$	—
State		—			—
Current taxes		—			—
Change in deferred taxes		667,494			(1,079,982	)
Change in valuation allowance		(631,149	)		1,114,931
Provision for income tax expense (benefit)	$	36,345		$	34,949

The following is a summary of the significant components of the Company’s deferred tax assets and liabilities at September 30, 2012:

Deferred tax assets:
Equity based compensation	$	71,859
Allowance for doubtful accounts		14,620
Depreciation and amortization timing differences		—
Net operating loss carryforward		897,377
On-line training certificate reserve		770
Total deferred tax assets		984,626
Valuation allowance		(972,651	)
Deferred tax assets net of valuation allowance		34,821
Less deferred tax assets – non-current, net of valuation allowance		11,586
Deferred tax assets – current, net of valuation allowance	$	385

The effective tax rate used for calculation of the deferred taxes as of September 30, 2012 was 34%. The Company has established a valuation allowance against deferred tax assets of $972,651 due to the uncertainty regarding realization, comprised primarily of a 98% reserve against the deferred tax assets attributable to the equity based compensation, a 100% reserve against the allowance for doubtful accounts, and a 99% reserve against the net operating carryforward.

The significant differences between the statutory tax rate and the effective tax rates for the Company for the nine months ended are as follows:

	September 30, 2012			September 30, 2011
Statutory tax rate benefit		—	%		—	%
Increase (decrease) in rates resulting from:
Net operating loss carryforward or carryback		64	%		(35	)%
Equity based compensation and loss		(4	)%		—	%
Book/tax depreciation and amortization differences		—	%		—	%
Change in valuation allowance		(55	)%		36	%
Other		—	%		—	%
Effective tax rate (benefit)		3	%		1	%

The following is a summary of the significant components of the Company’s deferred tax assets and liabilities at December 31, 2011:

Deferred tax assets:
Equity based compensation	$	21,743
Allowance for doubtful accounts		10,540
Depreciation and amortization timing differences		(4,389	)
Net operating loss carryforward		1,623,065
On-line training certificate reserve		1,162
Total deferred tax assets		1,652,121
Valuation allowance		(1,603,805	)
Deferred tax assets net of valuation allowance		48,316
Less deferred tax assets – non-current, net of valuation allowance		47,735
Deferred tax assets – current, net of valuation allowance	$	581

The effective tax rate used for calculation of the deferred taxes as of December 31, 2011 was 34%. The Company has established a valuation allowance against deferred tax assets of $1,603,805 due to the uncertainty regarding realization, comprised primarily of a 98% reserve against the deferred tax assets attributable to the equity based compensation, a 100% reserve against the allowance for doubtful accounts, a 97% reserve against the net operating carryforward, and a 25% reserve against depreciation and amortization timing differences.