Entity information:
Note 14: Income taxes
 
The provision for income taxes consists of the following:

Year ended December 31,
  
2016
    
2015
  
Current:
            
Federal
  
$
-
    
$
-
  
State
    
7500
      
15000
  
 
    
7500
      
15000
  
Net Operating Losses Carryback
    
-
      
-
  
 
    
7500
      
15000
  
Deferred:
                
Federal
    
(5,338,098
)
    
(1,334,500
)
State
    
(683,905
)
    
(170,973
)
 
    
(6,022,002
)
    
(1,505,473
)
Valuation Allowance
    
6,022,002
      
1,505,473
  
 
    
-
      
-
  
Provision for Income Taxes
  
$
7,500
    
$
15,000
  
 
A reconciliation of income taxes computed at the United States federal statutory income tax rate to the provision for income taxes is as follows:

Year ended December 31,
  
2016
    
2015
  
US Federal Statutory Rate @ 34%
  
$
(1,499,443
)
  
$
(1,498,917
)
State Taxes, Net of Federal Effect
    
(192,105
)
    
(192,038
)
Penalties
    
-
      
(57,534
)
Stock Compensation
    
14,595
      
60,184
  
Valuation Allowance
    
6,022,002
      
1,505,473
  
Capital Loss
    
(4,578,815
)
    
-
  
Other
    
288,155
      
18,977
  
Prior Period Adjustment
    
(54,389
)
    
163,855
  
Total
  
$
-
    
$
-
  
 
The tax effects of temporary differences that give rise to significant portions of the deferred tax asset were as follows:

Year ended December 31,
  
2016
    
2015
  
Current:
            
Allowance for Inventory Obsolescence
  
$
180,017
    
$
294,752
  
Allowance for Doubtful Accounts
    
-
      
176,846
  
Accrued Interest
    
6,509
      
-
  
Other
    
42,949
      
63,781
  
 
    
229,476
      
535,379
  
Valuation Allowance
    
(229,476
)
    
(535,379
)
Total
  
$
-
    
$
-
  
 
                
Noncurrent:
                
Net Operating Losses
  
$
6,614,728
    
$
4,767,919
  
Capital Losses
    
4,578,815
      
-
  
Property, Equipment and Intangibles
    
5,205
      
145,238
  
Tax Credits
    
306,319
      
264,820
  
Other
    
3,119
      
2,302
  
 
    
11,508,185
      
5,180,279
  
Valuation Allowance
    
(11,508,185
)
    
(5,180,279
)
 
                
Total
  
$
-
    
$
-
  
 
Based on the Company’s current financial and operational situation, management determined that it is more likely than not that the United States federal and state deferred tax assets will not be realized through the reduction of future income tax payments. Consequently, the Company has established a full valuation allowance for its United States federal and state deferred tax assets as of December 31, 2016.
 
As of December 31, 2016, the Company has approximately $16.9 million and $20 million of net operating loss (“NOL”) carry-forwards for federal and state income tax purposes, respectively. Expiration of the Company’s NOL carry-forwards begins in 2021. Section 382 of the Internal Revenue code of 1986 provide for an annual limitation of approximately $67,000 on the utilization of net operating loss carry-forwards as the Company underwent an ownership change in 2008, as defined in section 382. This limitation has been reflected in the United States federal and state net operating loss carry-forwards.

The Company adopted uncertain tax position in accordance with ASC 740 on January 1, 2007 and has not recognized any material increase in the liability for unrecognized income tax benefits as a result of the implementation. The Company estimates that the unrecognized tax benefit will not change within the next twelve months. The Company will continue to classify income tax penalties and interest, if any, as part of interest and other expenses in its statements of operations. The Company has incurred no interest or penalties as of December 31, 2016 and 2015.

The Company has identified United States federal and Oregon as major jurisdictions. The Company is currently open to audit under United States and state statute of limitations by the taxing authorities for 2013 through 2016.