Annual report pursuant to Section 13 and 15(d)

Income Taxes

v2.4.0.6
Income Taxes
 12 Months Ended
Dec. 31, 2011
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]

7. Income Taxes

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets as of December 31, 2011 and 2010 are summarized below. 

 

    December 31,  
    2011     2010  
Start-up and organization costs   $ 69,000     $ 76,000  
Contingent liability     31,000       31,000  
Net operating loss carryforwards     1,912,000       1,115,000  
Total deferred tax assets     2,012,000       1,222,000  
Valuation allowance     (2,012,000 )     (1,222,000 )
Net deferred tax assets   $ —     $ —  

 

In assessing the potential 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 be realized. The ultimate realization of deferred tax assets is dependent upon the Company attaining future taxable income during the periods in which those temporary differences become deductible. As of December 31, 2011 and 2010, management was unable to determine if it is more likely than not that the Company’s deferred tax assets will be realized, and has therefore recorded an appropriate valuation allowance against deferred tax assets at such dates.

 

No federal tax provision has been provided for the years ended December 31, 2011 and 2010 due to the losses incurred during such periods. A reconciliation between the income tax rate computed by applying the U.S. federal statutory rate and the effective tax rate for the years ended December 31, 2011 and 2010 is summarized below.

 

    Years Ended
December 31,		  
    2011     2010  
             
U. S. federal statutory tax rate     (34.0 )%     (34.0 )%
Non-deductible stock-based compensation     3.4 %     8.8 %
Non-deductible warrant extension cost     3.3 %     —  
Reduction to operating loss attributed to government grant     —       9.4 %
Adjustment to deferred tax asset     (4.0 )%     3.1 %
Change in valuation allowance     31.3 %     12.6 %
Other     —       0.1 %
Effective tax rate     0.0 %     0.0 %

 

At December 31, 2011, the Company has available net operating loss carryforwards for federal income tax purposes of approximately $4,607,000 which, if not utilized earlier, expire through 2030.