Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.6.0.2
Income Taxes
12 Months Ended
Dec. 31, 2016
Income Taxes  
Income Taxes

11.  Income Taxes

 

The Company has temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and their respective income tax basis, as measured by enacted state and federal rates as follows:

 

 

 

 

 

 

 

 

 

December 31

    

 

2016

  

 

2015

  

 

 

 

 

 

 

 

 

Deferred tax assets:

 

 

 

 

 

 

 

Net operating loss carryforwards

 

$

38,299,400

 

$

33,424,100

 

Charitable contributions

 

 

500

 

 

500

 

Inventory reserves

 

 

361,300

 

 

267,700

 

Amortization

 

 

89,500

 

 

51,400

 

Allowance for doubtful accounts

 

 

102,300

 

 

72,300

 

Stock-based compensation

 

 

341,400

 

 

260,600

 

Total deferred tax assets

 

 

39,194,400

 

 

34,076,600

 

Deferred tax liabilities:

 

 

 

 

 

 

 

Depreciation

 

 

(83,300)

 

 

(62,400)

 

Net deferred tax assets

 

 

39,111,100

 

 

34,014,200

 

Valuation allowance

 

$

(39,111,100)

 

$

(34,014,200)

 

 

As of December 31, 2016, the Company had net operating loss carry forwards of approximately $101.3 million to offset future taxable income which expire in various years through 2036. A valuation allowance is recorded to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that a portion or none of the deferred tax assets will be realized. After consideration of all the evidence, including reversal of deferred tax liabilities, future taxable income and other factors, management has determined that a full valuation allowance is necessary as of December 31, 2016 and 2015.  The valuation allowance increased by $5,096,900 and $4,452,000 during 2016 and 2015, respectively, to offset the deferred tax benefit in the respective years.  The difference between the financial statement income tax and the income tax benefit using statutory rates is primarily due to the increase in the valuation allowance.

 

The Company had no income tax expense or income tax benefit for 2015 and 2016 due to incurrence of net operating losses.  The Company does not believe there are any additional tax refund opportunities currently available.