Income Taxes

Blocker, a wholly-owned subsidiary, has elected to be taxed as a corporation. Accordingly, equity in the flow-through earnings of Eldorado and Mesquite is taxed to Blocker. NGA incurs certain other costs, primarily associated with being a public company, including professional and other fees, which, for tax purposes, flow through to its members

A reconciliation between the Company’s effective tax rate and the statutory tax rate for the years ended February 28, 2013 and December 31, 2011 follows:



	February 28, 2013					December 31, 2011 (1)
	Total			Percent		Total			Percent
Statutory federal rate	$	(340,939	)	35.00	%	$	(2,510,492	)	35.00	%
Amount not subject to corporate income taxes	116,304			(11.94	)%	90,590			(1.26	)%
Permanent items	(46,637		)	4.79	%	(14,276		)	0.20	%
Provision to tax return adjustments	25,628			(2.63	)%	—			—	%
Change in valuation allowance	300,570			(30.86	)%	2,434,178			(33.94	)%
Deferred True-up	(54,926		)	5.64	%	—			—	%
Tax at effective rate	$	—		—	%	$	—		—	%

(1)

The reconciliation of the Company's effective and statutory tax rates for the year ended February 29, 2012 is not presented here as it is virtually identical (in all respects) to that of the year ended December 31, 2011. In addition, the effective and statutory rates for the two months ended February 29, 2012 and February 28, 2011 did not vary materially as the only reconciling item is an immaterial change in the valuation allowance to reduce the income tax benefit to zero.

The Company has recorded a valuation allowance of 100% of its net deferred tax assets as of February 28, 2013 and December 31, 2011, as realization of the deferred tax asset is not considered more likely than not. In assessing the realizability of the deferred tax assets management considered whether future taxable income will be sufficient during the periods in which those temporary differences are deductible or before NOLs expire. Management considers the scheduled reversal of deferred tax liabilities, projected taxable income and tax planning strategies in making this assessment.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used to determine taxable income for income tax reporting purposes. The following table presents the significant components of the non-current deferred tax assets (liabilities) of the Company and its consolidated subsidiaries related to its investments in Eldorado and Mesquite as of February 28, 2013 and February 29, 2012.



	February 28, 2013			February 29, 2012
Net operating loss carryforward	$	1,431,895		$	1,562,703
Tax credit carryforward	295,230			182,791
Basis difference for investments in investees	4,115,180			3,887,377
Acquisition costs	157,079			144,800
Contributions limitation and carryforward	78,018			—
Subtotal	6,077,402			5,777,671
Less: valuation allowance	(6,077,402		)	(5,777,671		)
Net deferred tax asset	$	—		$	—

The Company has a federal income tax net operating loss carryforward of $4,091,127 and a federal income tax credit carryforward of $295,230, both of which will expire between 2028 and 2030.