Annual report pursuant to Section 13 and 15(d)


12 Months Ended
Dec. 31, 2017
Income Tax Disclosure [Abstract]  



As of December 31, 2017, we estimate we will have net operating loss carryforwards available to offset future federal income tax of approximately $12 million. These carryforwards will expire between the years 2029 through 2033. Under the Tax Reform Act of 1986, the amount of and the benefit from net operating losses that can be carried forward may be limited in certain circumstances. Events that may cause changes in the our tax carryovers include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. Therefore, the amount available to offset future taxable income may be limited. We carry a deferred tax valuation allowance equal to 100% of total deferred assets. In recording this allowance, we have considered a number of factors, but chiefly, our operating losses from inception. We have concluded that a valuation allowance is required for 100% of the total deferred tax assets as it is more likely than not that the deferred tax assets will not be realized.


Deferred tax assets were comprised of the following as of December 31, 2017 and 2016:


    2017   2016
Allowance for doubtful accounts   $ 118,000     $ 96,800  
Accrued expenses     99,000       146,200  
Current deferred tax asset     217,000       243,000  
Intangible and fixed assets     141,000       (447,000 )
NOL carryforward     3,162,000       4,330,000  
Long-term deferred tax asset     3,303,000       3,883,000  
Total deferred tax asset     3,520,000       4,126,000  
Less valuation allowance     (3,520,000 )     (4,126,000 )
Net deferred tax asset   $ —       $ —    


The benefit for income taxes differed from the amount computed using the U.S. federal income tax rate of 34% for December 31, 2017 and 2016 as follows:


    2017   2016
Income tax benefit   $ 1,060,000     $ 1,304,000  
Non-deductible items     (93,000 )     (784,000 )
State and other benefits included in valuation     41,000       82,000  
Provisional impact of the TCJA     (1,614,000 )     —    
Change in valuation allowance     606,000       (602,000 )
Income tax benefit   $ —       $ —    


The Company has reflected the change in its deferred tax assets and the accompanying valuation allowance provisionally based on its judgement of the effects of the Tax Cuts and Jobs Act which was enacted on December 22, 2017.