Income Taxes

9 Months Ended

12 Months Ended

Sep. 30, 2013

Dec. 31, 2012

Income Taxes

Income Taxes

Note 7: Income Taxes

During the quarter ended September 30, 2013, the Company recorded an income tax provision of $159,261, which was comprised of a current provision of $155,214 and a deferred provision of $4,047.

Note 5: Income Taxes

The Company has deferred tax assets and liabilities that 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.

Income taxes for years ended December 31, is summarized as follows:

	2012			2011
Current provision	$	646,131		$	720,323
Deferred provision (benefit)		(2,136	)		(49,826	)
Net income tax provision	$	643,995		$	670,497

A reconciliation of income tax computed at the U.S. statutory rate to the effective income tax rate is as follows:

	2012						2011
	Amount			Percent			Amount		Percent
Federal statutory rates	$	582,722			33	%	$	535,884		34	%
State income taxes		107,461			6	%		98,823		6	%
Other		(46,188	)		-3	%		35,790		2	%
Effective rate	$	643,995			36	%	$	670,497		42	%

The following is a summary of the components of the Company’s deferred tax assets:

	2012			2011
Deferred tax assets (liabilities) - current:
Accounts receivable	$	(18,694	)	$	(9,655	)
Prepaid Expenses		(23,434	)		(7,667	)
Stock-based compensation		73,000			26,275
Provisions and accruals		24,756			62,254
Deferred revenue		140,470			135,076
Total current deferred tax assets (liabilities)		196,098			206,283
Deferred tax assets (liabilities) - long-term:
Plant and equipment		4,704			2,216
Net operating loss carryforwards		9,834			-
Total net deferred tax assets	$	210,636		$	208,499

As of December 31, 2012, the Company did not have a significant tax operating loss carry forward.  No valuation allowances have been established for deferred tax assets based on a “more likely than not” threshold. The ability to realize deferred tax assets depends on our ability to generate sufficient taxable income within the carry forward periods provided in the tax law, which management estimate they will.

We have considered the following possible sources of taxable income when assessing the realization of our deferred tax assets:

· Future reversal of existing taxable temporary differences;

· Taxable income or loss, based on recent results, exclusive of reversing temporary differences and carry forwards; and

· Tax-planning strategies.