Annual report pursuant to section 13 and 15(d)

INCOME TAXES

v2.4.0.6
INCOME TAXES
 12 Months Ended
Dec. 31, 2012
INCOME TAXES [Abstract]  
INCOME TAXES

NOTE 17 - INCOME TAXES


The Company files income tax returns in the U.S. federal jurisdiction and various states. There was no income tax expense in 2012 and 2011 due to the Company's net taxable losses. The Company had net operating loss carry forwards of approximately $4,201,878 as of December 31, 2012 available to offset taxable income through 2032. The valuation allowance increased by $148,362 in 2012. The Company has established a 100% valuation allowance.


The Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years before 2007. None of the tax years subject to examination are currently under examination by a tax authority and the Company has not received notice of the intent by any tax authority to commence an examination.


The Company adopted the provisions of FIN No. 48 on January 1, 2009. As a result of the implementation of FIN No. 48, the Company did not recognize any liability for unrecognized tax benefits, since the Company has concluded that all of its tax positions are highly certain of being upheld upon examination by federal or state tax authorities.


The significant components of the Company's deferred tax account balances are as follows:


                 

 

 

Year ended

December 31,

 

 

 

2012

 

 

2011

 

Deferred tax assets:

 

 

 

 

 

 

Net operating losses

 

$

826,719

 

 

$

625,794

 

Capital loss carryover

 

 

10,496

 

 

 

10,496

 

Contributions

 

 

333

 

 

 

333

 

Deferred revenue

 

 

787

 

 

 

-

 

Valuation allowance

 

 

(836,312

)

 

 

(634,851

)

Net deferred tax assets

 

$

2,023

 

 

$

1,772

 

 

 

 

 

 

 

 

 

 

Total deferred tax liabilities

 

 

(2,023

)

 

 

(1,772

)

Total net deferred taxes

 

$

-

 

 

$

-

 


Reconciliation of the differences between income tax benefit computed at the federal statutory tax rate of 15% and the provision for income tax benefit for the years ended December 31, 2012 and 2011 is as follows:


                 

 

 

Year ended

December 31,

 

 

 

2012

 

 

2011

 

 

 

 

 

 

 

 

Income tax (loss) at federal statutory rate

 

 

(15.00

)%

 

 

(15.00

)%

State taxes, net of federal benefit

 

 

(4.08

)%

 

 

(4.68

)%

Nondeductible items

 

 

1.93

%

 

 

0.02

%

Changes in valuation allowance

 

 

17.15

%

 

 

19.66

%

 

 

 

0.00

%

 

 

0.00

%