Income Taxes

9 Months Ended

Sep. 30, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

The Company computes and records taxes payable based upon determination of taxable income which is different from pre-tax financial statement income.  Such differences arise from the reporting of financial statement amounts in different periods for tax purposes.  The timing differences are a result of different accounting methods being used for financial and tax reporting.

The Company’s total deferred tax assets and deferred tax liabilities were as follows at September 30, 2014 and December 31, 2013:

	September 30, 2014			December 31, 2013
Deferred tax assets:
Non-benefited  tax losses and credits	$	27,964,283		$	27,738,000
Total deferred tax assets		27,964,283			27,738,000
Deferred tax liabilities		-			-
Net book value of assets		-			-
Total deferred tax liabilities		-			-
Total net deferred tax assets		27,964,283			27,738,000
Valuation allowance		(27,964,283	)		(27,738,000	)
Net deferred tax assets	$	-		$	-

A valuation allowance has been established against the realization of the deferred tax assets since the Company has determined that the operating loss carryforwards may not be realized.

The Company has federal and state net operating loss carryforwards of approximately $46,137,134 and $45,430,000, respectively expiring between 2033 and 2026, respectively for September 30, 2014 and December 31, 2013. 

Internal Revenue Code Section 382 imposes limitations on our ability to utilize net operating losses if we experience an ownership change and for the NOL’s acquired in the acquisitions of subsidiaries.  An ownership change may result from transactions increasing the ownership percentage of 5% or greater stockholders in the stock of the corporation by more than 50 percentage points over a three-year period.  The value of the stock at the time of an ownership change is multiplied by the applicable long-term tax exempt interest rate to calculate the annual limitation.  Any unused annual limitation may be carried over to later years. The Company in June 2012, experienced a greater than 50% ownership change, so the rules of IRC section 382 apply.

At September 30, 2014 and December 31, 2013, the amount of gross unrecognized tax benefits before valuation allowances and the amount that would favorably affect the effective income tax rate in future periods after valuation allowances were zero.

The Company files income tax returns in U.S. federal and various state jurisdictions.  The Company is beyond the statute of limitations subjecting it to U.S. federal and state income tax examinations by tax authorities for years before 2011.  The Company is not currently subject to any income tax examinations by any tax authority.  Should a tax examination be opened, management does not anticipate any tax adjustments, if accepted, that would result in a material change to its financial position.