INCOME TAXES

6 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 9. INCOME TAXES

We have not made provision for income taxes for the six months ended June 30, 2013 or the year ended December 31, 2012, since we have net operating loss carryforwards to offset current taxable income.

Deferred tax assets consist of the following at June 30, 2013 and December 31, 2012:

	June 30,		December 31
	2013		2012
Benefit from net operating loss carryforwards	$	2,307,598	$	2,279,261
Allowance from doubtful accounts		44,098		-
Less:  valuation allowance		(2,351,696)		(2,279,261)
	$	-	$	-

Due to uncertainties surrounding our ability to generate future taxable income to realize these assets, a full valuation has been established to offset the net deferred income tax asset. Based on management’s assessment, utilizing an effective combined tax rate for federal and state taxes of approximately 37%, we have determined that it is not currently likely that a deferred income tax asset of approximately $2,351,696 and $2,279,261 attributable to the future utilization of the approximate $7,078,986 and $7,043,430 in eligible net operating loss carryforwards as of June 30, 2013 and December 31, 2012, respectively, will be realized. We will continue to review this valuation allowance and make adjustments as appropriate. The net operating loss carryforwards will begin to expire in varying amounts from year 2018 to 2031.

Current income tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, amounts available to offset future taxable income may be limited under Section 382 of the Internal Revenue Code.

Following is a reconciliation of the (provision) benefit for federal income taxes as reported in the accompanying Statements of Operations to the expected amount at the 34% federal statutory rate:

	Six months Ended June 30,,
	2013		2012
Income tax (provision) benefit at the 34% statutory rate	$	18,889	$	(32,450)
Effect of state income taxes		1667		(2,863)
Non-deductible interest expense		(85,591)		(28,568)
Other		7,400		5,841
Less change in valuation allowance		72,435		69,722
Income tax (provision) benefit	$	-	$	-

We are subject to taxation in the United States and certain state jurisdictions. Our tax years for 2003 and forward are subject to examination by the United States and applicable state tax authorities due to the carryforwards of unutilized net operating losses and the timing of tax filings.