Note 15 - Income Tax Expense

The Company’s income tax benefit/(provision) is as follows:

During 2015, the Company was approved by the State of New Jersey to sell a portion of its state tax benefits that existed as of December 31, 2014, pursuant to the Technology Tax Certificate Transfer Program. The Company received net proceeds of $269,344 for the year ended December 31, 2015 (2014: $-) as a result of the sale of the tax benefits, which has been included as an income tax benefit in the consolidated statement of operations and comprehensive income.

As of December 31, 2015 and 2014, the Company had Federal net operating loss carry forwards of approximately $58,000,000 and $51,300,000, expiring through the year ending December 31, 2035. As of December 31, 2015 and 2014, the Company had New Jersey state net operating loss carry forwards of approximately $7,200,000 and $11,900,000, expiring through the year ending December 31, 2022.

The principle components of the deferred tax assets and related valuation allowances as of December 31, 2015 and 2014 are as follows:

The reconciliation of income taxes using the statutory U.S. income tax rate and the benefit from income taxes for the years ended December 31, 2015 and 2014 are as follows:

The valuation allowance for deferred tax assets as of December 31, 2015 and 2014 was $23,234,000 and $19,438,896. The change in the total valuation for the years ended December 31, 2015 and 2014 were increases of $3,795,104 and $1,428,358. In assessing the realization of deferred tax assets, management 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 the generation of future taxable income during the periods in which the net operating losses and temporary differences become deductible. Management considered projected future taxable income and tax planning strategies in making this assessment. The value of the deferred tax assets was fully offset by a valuation allowance, due to the current uncertainty of the future realization of the deferred tax assets.

The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the statement of operations. As of January 1, 2015, the Company had no unrecognized tax benefits and no charge during 2015, and accordingly, the Company did not recognize any interest or penalties during 2015 related to unrecognized tax benefits. There is no accrual for uncertain tax positions as of December 31, 2015.

The Company files U.S. federal income tax returns and a state income tax returns. The U.S. and state income tax returns filed for the tax years ended on December 31, 2012 and thereafter are subject to examination by the relevant taxing authorities.