Entity information:

NOTE 7—INCOME TAXES

        The provision for income taxes consists of the following for the years ended December 31:

 
    
   2016   2015  
  Current   U.S.    $ 2,400   $ 2,400  
      International     1,293     1,164  
  Deferred   U.S.      —     —  
      International     —     —  
          $ 3,693   $ 3,564  

        A valuation allowance for the net deferred tax assets has been recorded as it is more likely than not that these benefits will not be realized through future operations.

        Deferred tax assets consist of the following as of December 31, 2016 and 2015:

               
 
   2016   2015  
Net operating loss carryforward   $ 20,881,231   $ 16,650,797  
General business tax credit     7,504,146     6,510,162  
Stock options     7,633,468     6,271,690  
Charitable contribution     56,617     79,944  
Accrued expenses     384,690     290,083  
Other     412,630     444,929  
Total gross deferred tax assets     36,872,782     30,247,605  
Less valuation allowance     (36,740,418 )   (30,116,742 )
Net deferred tax assets   $ 132,364   $ 130,863  

         Deferred tax liabilities consist of the following as of December 31, 2016 and 2015:

 

 
   2016   2015  
Unrealized gain on foreign exchange translation and others   $ (83,880 ) $ (99,228 )
Unrealized gain on securities available-for-sale     (48,484 )   (31,635 )
Total deferred tax liability   $ (132,364 ) $ (130,863 )

       During 2016 and 2015, the valuation allowance increased by $6,623,676 and $4,932,738, respectively.

        As of December 31, 2016 and 2015, the Company had net operating loss carryforwards for federal reporting purposes of approximately $51,240,000 and $42,909,000, which are available to offset future federal taxable income, if any, through 2036. In addition, the Company had net operating loss carryforwards for state income tax purposes of approximately $49,561,000 and $40,440,000 respectively, which expire in various years through 2036. The utilization of our net operating losses could be subject to an annual limitation as a result of certain past and future events, such as acquisition or other significant equity events, which may be deemed as a "change in ownership" under the provisions of the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitations could result in the expiration of net operating losses and tax credits before utilization. As of December 31, 2016 and 2015, the Company has general business tax credits of $7,504,000 and $6,510,000, respectively, for federal tax purposes. The tax credits are available to offset future tax liabilities, if any, through 2026.

        The income tax provision differs from that computed using the statutory federal tax rate of 34%, due to the following:

 
   2016   2015  
Tax benefit at statutory federal rate   $ (7,481,009 ) $ (4,295,120 )
State taxes, net of federal tax benefit     (695,697 )   (469,692 )
Increase in valuation allowance     6,640,524     4,948,921  
Permanent items     3,633,702     675,959  
General business tax credit     (993,983 )   (789,556 )
Other     (1,099,844 )   (66,948 )
    $ 3,693   $ 3,564  

         As of December 31, 2016 and 2015, the Company had no unrecognized tax benefits, and the Company had no positions which, in the opinion of management, would be reversed if challenged by a taxing authority. In the event the Company is assessed interest and/or penalties, such amounts will be classified as income tax expense in the financial statements. As of December 31, 2016, all federal tax returns since 2013 and state tax returns since 2012 are still subject to adjustment upon audit. No tax returns are currently being examined by taxing authorities.