Income Taxes

12 Months Ended

Sep. 30, 2011

Income Taxes

Income Taxes

Note 8 -- Income Taxes

         We have incurred losses since operations commenced in 1990.  We have a net operating loss carry forward for income tax purposes of approximately $13,135,140. The total loss carry forward expiring on September 30, 2031 is $1,265,9090, expiring on September 30, 2030 is $1,428,285, expiring on September 30, 2029 is $2,093,526, expiring on September 30, 2028 is $3,959,334, expiring on September 30, 2027 is $3,513,085, expiring on September 30, 2026 is $426,697, expiring on September 30, 2025 is $203,978, expiring on September 30, 2024 is $198,988, expiring on September 30, 2023 is $25,597 and expiring on September 30, 2022 is $19,741.  We changed its year-end to September 30th from February 28th effective in fiscal 2006.  Additionally, utilization of net operating loss carryforwards may be limited under Section 382 of the Internal Revenue Code.  These and other deferred tax assets are fully reserved by a valuation allowance as management has determined that it is more likely than not that the deferred tax assets will not be realized.

         Deferred income taxes arise from timing differences resulting from income and expense items reported for financial accounting and tax purposes in different periods.

         The principal sources of timing differences are different accrual versus cash accounting methods used for financial accounting and tax purposes; the timing of the utilization of the net operating losses, and different book versus tax depreciation methods.

Tax Rate Reconciliation	2011	2010
Income tax expense (benefit) at the statutory rate	(414,341)	(646,360)
Compensation and BCF expense	248,283	145,285
Other permanent differences, net	(4,182)	13,830
Valuation Allowance	170,240	487,246
	$              -	$           -
The States in which we currently operate did not have a corporate income tax in effect as of
September 30, 2011 and 2010.

As of September 30, 2011and 2010, the deferred tax asset based on a 34% tax bracket consists of the following:

	2011	2010
Assets:
Federal loss carry forwards	$4,465,948	$      4,035,538
Cash basis accounting differences	138,024	403,322
Liability:
Depreciation timing differences	15,245	10,117
Deferred tax asset	4,619,217	4,448,977
Valuation  allowance	(4,619,217)	(4,448,977)
Net deferred tax asset	$                     -	$                    -

The tax benefit from net operating losses and differences in timing differ from the federal statutory rate primarily due to the $170,240 change in the deferred tax asset valuation allowance from September 30, 2010.  As of September 30, 2011 and 2010, the Company had no unrecognized tax benefits due to uncertain tax positions.