INCOME TAXES

3 Months Ended

Mar. 31, 2012

INCOME TAXES

INCOME TAXES

7. INCOME TAXES

The Company recognizes deferred income tax liabilities and assets for the expected future tax consequences of events that have been recognized in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement and income tax purposes under enacted tax laws and rates.  Components of the Company’s deferred tax liabilities and assets are as follows:

		March 31, 2012
Deferred tax assets:
Net operating loss carry forwards	$	(8,428,028)
add back compensation accruals		1,901,052
		(6,526,976)
Statutory tax rate (combined federal and state)		37.60%
Non-capital tax loss		2,454,143
Valuation allowance		(2,454,143)
Deferred tax asset		-

A valuation allowance for the deferred tax asset has been provided, as it is more likely that not that this asset will not be realized.