Note 8 - Income Taxes

6 Months Ended

Jun. 30, 2011

Income Tax Disclosure [Text Block]

NOTE 8 – INCOME TAXES

At June 30, 2011, we had available federal and state net operating loss carryforwards to reduce future taxable income.  The amounts available were approximately $1,438,000 for federal purposes.  The Federal carryforward expires in 2030.  Given our history of net operating losses, management has determined that it is more likely than not that we will not be able to realize the tax benefit of the carryforwards.  Accordingly, we have not recognized a deferred tax asset for this benefit.

Accounting guidance requires that a valuation allowance be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.  Due to restrictions imposed by Internal Revenue Code Section 382 regarding substantial changes in ownership of companies with loss carry-forwards, the utilization of our net operating loss carry-forwards will likely be limited as a result of cumulative changes in stock ownership.  The company has not recognized a deferred tax asset and, as a result, the change in stock ownership has not resulted in any changes to valuation allowances.

Upon our attainment of taxable income, management will assess the likelihood of realizing the tax benefit associated with the use of the carryforwards and will recognize a deferred tax asset at that time.

Significant components of our deferred income tax assets are as follows as of:

	June 30, 2011			December 31, 2010
Deferred income tax asset:
Net operating loss carry forward	$	561,000		$	21,000
Valuation allowance		(561,000	)		(21,000	)
Net deferred income tax asset	$	-		$	-

Reconciliation of the effective income tax rate to the U.S. statutory rate is as follows:

	Six Months Ended June 30,
	2011			2010
Federal statutory tax rate		(34	%)		34	%
State tax, net of federal benefit		(5	%)		5	%
Change in valuation		(39	%)		39	%
Allowance		39	%		(39	%)
Effective tax rate		-	%		-	%