Entity information:
NOTE
1
4
:              
INCOME TAXES
 
A reconciliation of income tax expense and the amount computed by applying the statutory federal income tax rate to the income before provision for income taxes is as follows
:
 
   
December 31, 2016
    
December 31, 2015
  
Federal statutory rate applied to income/(loss) before income taxes
   $
38,740
     $
963,947
  
Increase/(decrease) in income taxes results from:
                
Current tax expense/(benefit)
    
1,069
      
(24,739
 )
Nondeductible expenses
    
1,078,519
      
(1,451,221
 )
Change in deferred assets
    
41,019
      
97,580
  
Change in valuation allowance
    
(1,158,278
 )    
389,694
  
                 
Income tax expense/(benefit)
   $
1,069
     $
(24,739
 )
 
The components of income tax expense/(benefit) for the year ended:
 
   
December 31, 2016
    
December 31, 2015
  
Current tax expense/(benefit):
   $
1,069
     $
(24,739
 )
Deferred tax expense/(benefit):
                
Bad debt allowance
    
(23,699
 )    
26,059
  
Operating loss carryforward
    
1,140,957
      
(513,333
 )
Amortization of intangibles
    
5,482
      
5,482
  
Patent litigation settlement
    
35,538
      
92,098
  
     
1,159,347
      
(414,433
 )
Valuation allowance
    
(1,158,278
 )    
389,694
  
                 
Total tax expense/(benefit)
   $
1,069
     $
(24,739
 )
 
Deferred income taxes 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. Significant components of our deferred tax assets and liabilities are as follows:
 
   
December 31, 2016
    
December 31, 2015
  
Amortization of intangibles
   $
267,253
     $
272,734
  
Bad debt allowance
    
66,662
      
42,963
  
Patent litigation liability accrual
    
128,804
      
164,342
  
Operating loss carryforwards
    
19,034,573
      
20,175,531
  
Gross deferred tax assets
    
19,497,292
      
20,655,570
  
Valuation allowance
    
(19,497,292
 )    
(20,655,570
 )
                 
Net deferred tax liability/(asset)
   $
-0-
     $
-0-
  
 
The Company has net operating loss carry forwards (NOL) for income tax purposes of $
35,363,091.
  This loss is allowed to be offset against future income until the year
2036
when the NOL’s will expire.  Other timing differences relate to depreciation and amortization for the stock acquisition of Education Navigator in
1998.
  The tax benefits relating to all timing differences have been fully reserved for in the valuation allowance account due to the substantial losses incurred through
December
31,
2016.
  The change in the valuation allowance for the year ended
December
31,
2016
was a decrease of
$1,158,278.
The Company's tax returns for the prior
three
years remain subject to examination by major tax jurisdictions.