• Filing Date: 2015-04-09
  • Form Type: 10-K
  • Description: Annual report
12 Months Ended
Dec. 31, 2014
Income Tax Disclosure [Abstract]  

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.


A 100% valuation allowance has been provided for all 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 $32,300,000 with various expiration dates between 2018 and 2034 if not utilized. All tax years starting with 2011 are open for examination.


Non-current deferred tax asset:


    2014     2013  
34% of net operating loss carry forwards   $ 10,968,027     $ 9,948,987  
Valuation allowance     (10,968,027 )     (9,948,987 )
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, 2014 and 2013 are listed below.


    2014     2013  
Expected federal income tax benefit   $ 774,580     $ 1,410,350  
Change in valuation allowance     (1,019,040 )     (734,830 )
Goodwill amortization     142,386       -  
Derivative gain     26,569       124,269  
Amortization of beneficial conversion discount     (47,008 )     (290,411 )
Other     300,706       198,464  
Stock-based compensation     (178,193 )     (707,842 )
Income tax expense (benefit)   $ -     $ -  


The Company has no tax positions at December 31, 2014 and 2013 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.


The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.  During the years ended December 31, 2012 and 2011, the Company recognized no interest and penalties.  All tax years starting with 2009 are open for examination.