Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.6.0.2
Income Taxes
12 Months Ended
Dec. 31, 2016
Income Tax Disclosure [Abstract]  
Income Taxes
Note 10 — Income Taxes
 
The Company files U.S. federal and various state and foreign tax returns.
 
Pre-tax earnings consisted of the following for the years ended:
 
 
 
December 31,
 
December 31,
 
 
 
2016
 
2015
 
 
 
 
 
 
 
Pre-Tax (Loss) Earnings
 
 
 
 
 
 
 
U.S.
 
$
(18,262,129)
 
$
(13,425,887)
 
Outside the U.S.
 
 
(987,953)
 
 
(1,591)
 
Total Pre-Tax (Loss) Earnings
 
$
(19,250,082)
 
$
(13,427,478)
 
 
The provision (benefit) for income taxes for the years ended December 31, 2016 and 2015 was as follows:
 
 
 
2016
 
2015
 
 
 
 
 
 
 
U.S. Income Taxes
 
 
 
 
 
 
 
Current Provision
 
$
 
$
 
Deferred Provision
 
 
 
 
 
Income Taxes Outside the U.S.
 
 
 
 
 
 
 
Current Provision
 
 
 
 
 
Deferred Provision
 
 
 
 
 
State Income Taxes
 
 
 
 
 
 
 
Current Provision
 
 
 
 
 
Deferred Provision
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Provision
 
$
 
$
 
 
A reconciliation of the statutory U.S. federal income tax rate to the effective rates for the years ended December 31, 2016 and 2015 is as follows:
 
 
 
2016
%
 
2015
%
 
Federal Income Tax at Statutory Rate
 
 
34.0
 
 
34.0
 
State Tax Provision, Net of Federal Benefit
 
 
0.3
 
 
0.3
 
Foreign Income Taxed at Other Than 34%
 
 
(0.7)
 
 
(0.0)
 
Loss on Derivative Valuation
 
 
0.0
 
 
(6.3)
 
Other
 
 
0.5
 
 
0.7
 
 
 
 
 
 
 
 
 
Effective Tax Rate
 
 
34.1
 
 
28.7
 
Change in Valuation Allowance
 
 
(34.1)
 
 
(28.7)
 
 
 
 
 
 
 
 
 
Net Effective Tax Rate
 
 
0.0
 
 
0.0
 
 
Significant components of the Company’s deferred tax assets and liabilities at year end are as follows:
 
 
 
December 31,
2016
 
December 31,
2015
 
 
 
 
 
 
 
Deferred Tax Assets
 
 
 
 
 
 
 
Net Operating Loss Carry-forwards
 
$
19,752,311
 
$
15,027,603
 
Tax Credit Carry-forwards
 
 
2,398,817
 
 
1,823,661
 
Inventory Valuation Adjustment
 
 
622,168
 
 
161,944
 
Officer’s Compensation
 
 
271,095
 
 
141,491
 
Loss from Foreign Operations
 
 
197,907
 
 
 
 
Other
 
 
44,372
 
 
89,783
 
Total Deferred Tax Assets
 
 
23,286,670
 
 
17,244,482
 
 
 
 
 
 
 
 
 
Deferred Tax Liabilities
 
 
 
 
 
 
 
Other
 
 
76,815
 
 
271,565
 
 
 
 
 
 
 
 
 
Net Deferred Tax Assets Before Valuation Allowance
 
$
23,209,855
 
$
16,972,917
 
Valuation Allowance
 
 
(23,209,855)
 
 
(16,972,917)
 
 
 
 
 
 
 
 
 
Net Deferred Tax Assets
 
$
 
$
 
 
As of December 31, 2016, the Company has approximately $57.6 million in net operating loss carry-forwards and approximately $2.4 million of federal and state credit carry-forwards which will begin to expire in 2018 if not utilized.
 
As the result of the assessment of the FASB ASC 740-10 (Prior Authoritative Literature: FASB Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109), the Company has no unrecognized tax benefits. By statute, tax years 2012-2016 are open to examination by the major taxing jurisdictions to which the Company is subject.
 
FASB ASC 740 (Prior Authoritative Literature: SFAS No. 109, Accounting for Income Taxes), requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differing treatment of items for financial reporting and income tax reporting purposes. The deferred tax balances are adjusted to reflect tax rates by tax jurisdiction, based on currently enacted tax laws, which will be in effect in the years in which the temporary differences are expected to reverse. In light of the historic losses of the Company, a 100% valuation allowance has been recorded to fully offset any benefit associated with the net deferred tax assets, for which realization is not considered more likely than not to occur.