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Income Taxes
 12 Months Ended
Dec. 31, 2016
Income Tax Disclosure [Abstract]  
Income Taxes

(5) Income Taxes

 

Since inception, the Company has incurred losses from operations and as a result has not recorded income tax expense. Benefits related to net operating loss carry-forwards and deferred items have been fully reserved since it is not more likely than not that the Company will achieve profitable operations. The difference between the total income taxes at the federal statutory rate for each of the years ended December 31, 2016, 2015 and 2014 and the fact that no income tax benefit was recorded in each of these three years is attributable to the change in the valuation allowance recorded in each year.

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets at December 31, 2016 and 2015 are presented below.

 

    2016     2015  
Deferred tax assets:                
Depreciation   $ 116,000     $ 113,000  
Allowance for bad debts     393,000       211,000  
Net operating loss carry-forwards     24,916,000       23,628,000  
Stock option expense     1,272,000       1,358,000  
Research and other credits     1,210,000       1,154,000  
Other temporary differences     15,000       15,000  
Total gross deferred tax assets     27,922,000       26,479,000  
Less valuation allowance     (27,922,000 )     (26,479,000 )
    $ -     $ -  

 

In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon future taxable income during the period in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon its historical operating losses, utilization of deferred tax assets cannot currently be determined. Accordingly, the Company has recorded a full valuation allowance against the deferred tax assets, as they will not be realized until the Company achieves profitable operations in the future.

 

At December 31, 2016, the Company had a net operating loss carry-forward for federal income tax purposes of approximately $70,000,000, varying amounts of which will expire in each year from 2017 through 2037. Research and other credit carry-forwards of approximately $1,210,000 are available to the Company to reduce income taxes payable in future years principally through 2036. The Company’s ability to utilize its net operating loss carryforwards and its current year tax credits in future periods are subject to the 382 limitation.