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INCOME TAXES | 12 Months Ended
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Dec. 31, 2013
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] |
| 11. | INCOME TAXES
Our income tax expense (benefit) aggregated $87,865, $102,640 and ($287,171) (amounting to 43%, 53% and (41%) of the income (loss) before income taxes, respectively) for the years ended December 31, 2013, 2012 and 2011, respectively. The income tax provision consisted of the following:
|  | Year Ended December 31, |
|  | 2013 |  | 2012 |  | 2011 |
Current |  | $ | 301 |  | $ | 708 |  | $ | 510 |
Federal |  |  | 74,713 |  |  | 89,788 |  |  | (250,899) |
State |  |  | 12,851 |  |  | 12,144 |  |  | (36,782) |
Deferred |  |  | 87,564 |  |  | 101,932 |  |  | (287,681) |
Total |  | $ | 87,865 |  | $ | 102,640 |  | $ | (287,171) |
The actual income tax expense (benefit) differs from the expected tax computed by applying the U.S. federal corporate tax rate of 34% to income before income tax as follows:
|  | Year Ended December 31, |
|  | 2013 |  | 2012 |  | 2011 |
Computed expected tax expense (benefit) |  | $ | 69,788 |  | $ | 65,332 |  | $ | (236,871) |
State income taxes, net of federal expense (benefit) |  |  | 8,482 |  |  | 8,015 |  |  | (24,276) |
Share-based compensation |  |  | 10,526 |  |  | 9,766 |  |  | 8,042 |
Research and development tax credit |  |  | (21,887) |  |  | (10,813) |  |  | (23,796) |
Other |  |  | 20,956 |  |  | 30,340 |  |  | (10,270) |
Total income tax expense (benefit) |  | $ | 87,865 |  | $ | 102,640 |  | $ | (287,171) |
The significant components of our deferred tax asset consisted of the following:
|  | As of December 31, |
|  | 2013 |  | 2012 |
Deferred revenue and other reserves |  | $ | 5,565 |  | $ | 6,028 |
Product rights |  |  | 165,527 |  |  | 201,000 |
Depreciation |  |  | 8,215 |  |  | 8,355 |
Research and development tax credit |  |  | 235,567 |  |  | 207,529 |
Federal net operating loss carryforward |  |  | 525,012 |  |  | 592,774 |
State net operating loss carryforward |  |  | 201,698 |  |  | 238,536 |
Interest rate swap |  |  | 13,166 |  |  | 33,263 |
Prepaid expenses and other |  |  | 15,143 |  |  | (10,326) |
Deferred tax asset |  | $ | 1,169,893 |  | $ | 1,277,159 |
We have a state net operating loss carryforward of approximately $2,259,000 that expires in 2028, 2029, 2030 and 2031, if not utilized before then, and a federal net operating loss carryforward of approximately $1,544,000 that expires in 2029, 2030 and 2031, if not utilized before then. The $965,000 licensing payment that we made during the fourth quarter of 2004 was treated as an intangible asset and is being amortized over 15 years, for tax return purposes only. Approximately $1,258,000 of our planned investment to produce pharmaceutical-grade Nisin for Mast OutÒ is being expensed as incurred for our books (including approximately $110,000 during the fourth quarter of 2013), but this investment will be capitalized and depreciated over statutory periods for tax return purposes. Deferred tax assets are recognized only when it is probable that sufficient taxable income will be available in future periods against which deductible temporary differences and credits may be utilized. However, the amount of the deferred tax asset could be reduced if projected income is not achieved due to various factors, such as unfavorable business conditions. If projected income is not expected to be achieved, we would decrease the deferred tax asset to the amount that we believe can be realized. Net operating loss carryforwards, credits, and other tax attributes are subject to review and possible adjustment by the Internal Revenue Service. Section 382 of the Internal Revenue Code contains provisions that could place annual limitations on the future utilization of net operating loss carryforwards and credits in the event of a change in ownership, as defined. The Company files income tax returns in the U.S. federal jurisdiction and several state jurisdictions. With few exceptions, the Company is no longer subject to income tax examinations by tax authorities for years before 2010. We currently have no tax examinations in progress. We also have not paid additional taxes, interest or penalties as a result of tax examinations nor do we have any unrecognized tax benefits for any of the periods in the accompanying financial statements.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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