NOTE 24 – INCOME TAXES

Deferred taxes represent the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes. Temporary differences result primarily from the recording of tax benefits of net operating loss carry forwards and stock-based compensation.

As of December 31, 2013, the Company has an insufficient history to support the likelihood of ultimate realization of the benefit associated with the deferred tax asset. Accordingly, a valuation allowance has been established for the full amount of the net deferred tax asset.

The Company’s effective income tax rate differs from the amount computed by applying the federal statutory income tax rate to loss before income taxes as follows:

	December 31,
	2013			2012

Income tax benefit at the federal statutory rate		-34	%		-34	%
State income tax benefit, net of federal tax benefit		-6	%		-6	%
Change in fair value of warrant liability		20	%		20	%
Change in valuation allowance for deferred tax assets		20	%		20	%
Total		0	%		0	%

	December 31,
	2013			2012
Deferred tax assets:
Net operating loss carryforwards	$	5,895,966		$	1,208,000
Less valuation allowance		(5,895,966	)		(1,208,000	)
Net deferred tax asset	$	-		$	-



Net operating loss carryforwards
Accumulated deficit		(21,380,138	)		(3,020,566	)
Effective tax rate		40	%		40	%
		8,552,055			1,208,000

As of December 31, 2013 and 2012, the Company had estimated Federal and California income tax net operating loss carryforwards of approximately $9,031,880 and $2,047,325, respectively.

Section 382 of the Internal Revenue Code can limit the amount of net operating losses which may be utilized if certain changes to a company’s ownership occur. The Company is in the process of evaluating whether such changes in ownership occurred, and its effect on the utilization of its loss carryforwards.

As a result of the implementation of certain provisions of ASC 740, Income Taxes, the Company performed an analysis of its previous tax filings and determined that there were no positions taken that it considered uncertain. Therefore, there were no unrecognized tax benefits as of December 31, 2013 and 2012.

The following table summarizes the open tax years for each major jurisdiction:

Jurisdiction	Open Tax Years

Federal	2010-2012

State	2009-2012