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 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 and liabilities at December 31, 2012 and 2011 are as follows:
 
   
2012
    
2011
  
Deferred tax assets:
            
    Net operating losses
  
$
13,609,036
    
$
13,089,314
  
    Share-based compensation
    
1,497,556
      
741,420
  
    Other differences in tax basis
    
233,043
      
4,749
  
                 
Total deferred tax assets
    
15,339,634
      
13,835,483
  
Less: valuation allowance
    
(15,339,634
)
    
(13,835,483
)
                 
Deferred tax assets, net
  
$
-
    
$
-
  
 
As of December 31, 2012, for U.S. federal income tax reporting purposes, the Company has approximately $43 million of unused net operating losses (“NOLs”) available for carry forward to future years. The benefit from the carry forward of such NOLs will begin expiring during the year ended December 31, 2020. Because United States tax laws limit the time during which NOL carry forwards may be applied against future taxable income, the Company may be unable to take full advantage of its NOL for federal income tax purposes should the Company generate taxable income. Further, the benefit from utilization of NOLs carry forwards could be subject to limitations due to material ownership changes that could occur in the Company as it continues to raise additional capital. Based on such limitations, the Company has significant NOLs for which realization of tax benefits is uncertain.

The difference between the income tax provision and the amount that would result if the U.S. Federal statutory rate of 34% were applied to pre-tax income (loss) for the years ended December 31, 2012 and 2011 are as follows:
 
   
For the years ended
  
   
December 31, 2012
    
December 31, 2011
  
                         
Federal income taxes at 34%
  
$
(2,842,810
)
    
-34.00
%
  
$
(1,171,230
)
    
-34.00
%
Share-based compensation costs
    
756,136
      
9.04
%
    
736,796
      
21.39
%
Change in fair value of derivatives
    
233,043
      
2.79
%
    
4,748
      
0.13
%
Amortization of debt discounts
    
349,481
      
4.18
%
    
56,033
      
1.63
%
Change in valuation allowance
    
1,504,152
      
17.99
%
    
373,653
      
10.85
%
                                 
Provision for income tax
  
$
-
      
-
    
$
-
      
-