5. Income Taxes

6 Months Ended

Jan. 31, 2013

Income Tax Disclosure [Text Block]

Note 5. Income Taxes

The Company provides for income taxes asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. This method requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company has net operating loss (NOL) carry forwards that were derived solely from operating losses from prior years.  These amounts can be carried forward to offset future taxable income for a period of 20 years for each tax year’s loss.  These NOL carry forwards begin to expire in 2026. No provision was made for federal income taxes as the Company has significant net operating losses.

The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate to the net loss before provision for income taxes for the following reasons:

	January 31, 2013			January 31, 2012
Income tax expense at statutory rate	$	(648,607	)	$	(3,597,082	)
Valuation allowance		648,607			3,597,082
Income tax expense per books	$	-		$	-

Net deferred tax assets consist of the following components as of:

	January 31, 2013			January 31, 2012
Net Operating Loss Carryover	$	(9,980,876	)	$	(4,405,131	)
Valuation allowance		9,980,876			4,405,131
Net deferred tax asset	$	-		$	-

The Company had no uncertain tax positions at January 31, 2013 and July 31, 2012.