• Filing Date: 2014-04-14
  • Form Type: 10-K
  • Description: Annual report
v2.4.0.8
11. INCOME TAXES
12 Months Ended
Dec. 31, 2013
Income Tax Disclosure [Abstract]  
11. INCOME TAXES

The Company accounts for income taxes in accordance with ASC Topic No. 740, “Income Taxes.”  This standard requires the Company to provide a net deferred tax asset or liability equal to the expected future tax benefit or expense of temporary reporting differences between book and tax accounting and any available operating loss or tax credit carry forwards.

 

At December 31, 2013, a deferred tax asset results from the net operating loss carryover of approximately $29,300,000, based on the U.S. Corporate income tax rate of 34%.  A 100% valuation allowance has been provided for the deferred tax assets, as the ability of the Company to generate sufficient taxable income in the future is uncertain.

 

The unexpired net operating loss carry forward at December 31, 2013 is approximately $29,300,000 with various expiration dates between 2018 and 2033 if not utilized. All tax years starting with 2010 are open for examination.

 

Current deferred tax asset:

 

    2013     2012  
Asset Reserve Accounts   $ -     $ 984,068  
Valuation allowance     -       (984,068 )
Net benefit recorded     -       -  

 

Non-current deferred tax asset:

 

    2013     2012  
34% of net operating loss carry forwards   $ 9,948,987     $ 9,214,157  
Valuation allowance     (9,948,987 )     (9,214,157 )
Net non-current deferred tax asset     -       -  

 

Reconciliations of the expected federal income tax benefit based on the statutory income tax rate of 34% to the actual benefit for the years ended December 31, 2012 and 2011 are listed below.

 

    2013     2012  
Expected federal income tax benefit   $ 1,410,350     $ 627,410  
Valuation allowance     (734,830 )     (1,928,362 )
Debt Settlement Expense     -       8,940  
Impairment Loss     -       (9,195 )
Derivative Gain     124,269       1,581,360  
Amortization of debt discounts and financing costs     (290,411 )     (99,632 )
Other     198,464       (167,871 )
Stock-based compensation     (707,842 )     -  
Expiration of Net Operating Loss Carryover     -       (12,650 )
Income tax expense (benefit)   $ -     $ -  

 

The Company has no tax positions at December 31, 2013 and 2012 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.