Note 9 - Income Taxes

The actual income tax provision differs from the expected income tax provision computed at the federal statutory rate as follows:

	Year Ended December 31,
	2015		2014		2013

Statutory federal tax benefit	$	(1,148,846)	$	(3,363,841)	$	(3,963,246)
State income tax, net of federal benefit		(124,626)		(450,656)		(1,179,476)
Other permanent differences		6,909		(6,274)		(2,706,156)
Foreign rate differential		68,482		7,913		(710,512)
Rate change		1,218		794,807		(369,407)
Lobbying costs		1,047		57,517		98,507
Expired/forfeited options		1,049,765		380,689		-
Cancellation of debt limitation write off		-		-		6,246,942
Other		2,949		(308)		(1,816)
Subtotal		(143,102)		(2,580,153)		(2,585,164)
Decrease (increase) in valuation allowance		204,848		2,641,899		2,646,910
Income tax provision (benefit)	$	61,746	$	61,746	$	61,746

	Year Ended December 31,
	2015		2014		2013

Deferred tax assets:
Net operating loss ("NOLs") carryforwards	$	65,635,003	$	64,361,842	$	61,590,084
Fixed assets/intangibles		139,853		166,205		148,395
Research and development credits/loss carryforwards		8,900		3,834		1,726
Share-based compensation		2,352,660		3,458,334		3,368,571
Accrued expenses and other		91,210		366,797		859,358
Total deferred tax assets		68,227,626		68,357,012		65,968,134

Deferred tax liabilities:		-		-		-
Intercompany bad debt		-		-		-
Total deferred tax liabilities		-		-		-
Net deferred tax assets		68,227,626		68,357,012		65,968,134
Less: Valuation allowance		(68,608,401)		(68,676,033)		(66,225,409)
Net deferred tax liabilities	$	(380,775)	$	(319,021)	$	(257,275)

For the years ended December 31, 2015 and 2014, we increased the valuation allowance to fully reserve for the value of deferred tax assets. Due to continued operating losses, there is no indication that it is more likely than not that we will be able to utilize our deferred tax assets.

The U.S. federal NOLs of approximately $156.3 million will begin to expire in various years beginning in 2022, if not limited by triggering events prior to such time. In connection with the adoption of stock-based compensation guidance in 2006, the Company elected to follow the with-and-without approach to determine the sequence in which deductions and NOLs are utilized. Under Section 382 of the U.S. Internal Revenue Code, the Company’s U.S. federal NOLs may be limited due to certain underlying ownership changes of its common stock. Our most recent analysis under Section 382 determined that there has been no impact on our ability to utilize our U.S. federal NOLs as the result of any prior ownership change. We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership that could result in further limitations being placed on our ability to utilize our U.S. federal NOLs. The UK net operating loss carry forwards of approximately $19.6 million have an unlimited life.

In assessing our ability to realize deferred tax assets, we consider whether it is more likely than not that some or all of the deferred tax asset will not be realized. The ultimate realization of the deferred tax asset is dependent upon the generation of future taxable income during the periods in which the net operating loss carry forwards are available. We consider projected future taxable income, the scheduled reversal of deferred tax liabilities and available tax planning strategies that can be implemented by us in making this assessment on a jurisdiction-by-jurisdiction basis. Based upon these factors, we have established a full valuation allowance against the net deferred tax asset in 2015, consistent with 2014. Also, the Company has a deferred tax liability related to tax deductible goodwill, for which the scheduled reversal is not determinable. As such, this deferred tax liability cannot be used as a source of future taxable income with which to realize the deferred tax assets. The cumulative amount of this deferred tax liability is approximately $0.4 million at December 31, 2015 and is classified as Other long-term liabilities on the consolidated balance sheets.

We have analyzed tax positions in all jurisdictions where the Company is required to file an income tax return and have concluded that we do not have any material unrecognized tax benefits. As such, we believe that any of our uncertain tax positions would not result in adjustments to our effective income tax rate.