INCOME TAXES

12 Months Ended

Dec. 31, 2015

Income Taxes

INCOME TAXES

NOTE 7 – INCOME TAXES

At December 31, 2015, the Company has approximately $8,699,000 of net operating loss carry-forwards which expire between 2031 and 2035. The net operating loss carry-forwards may be subject to certain restrictions in the future, particularly in the event of a change in ownership under Internal Revenue Code Section 382.

Deferred tax assets and liabilities are recorded based on the difference between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, as measured by the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are carried on the balance sheet with the presumption that they will be realizable in future periods when pre-tax income is generated. A valuation allowance is required to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Deferred tax assets and liabilities represent the future impact of temporary differences between the financial statement and tax bases of assets and liabilities.  The Company’s net deferred tax assets have been fully reserved, effectively by a valuation allowance, because management does not believe realization of the deferred tax assets is more likely than not at the balance sheet date.

The deferred tax assets (liabilities) and associated valuation allowance at December 31, 2015 and 2014, are as follows:

	2015			2014
Current assets:
Stock based compensation	$	490,000		$	370,000
		490,000			370,000
Non-current assets:
Intangible assets		4,900			7,000
Property and equipment		840,000			157,000
Net operating loss carryforwards		3,219,000			2,598,000
		4,553,900			3,132,000
Valuation allowance		(4,553,900	)		(3,132,000	)
Net deferred tax assets	$	-		$	-

No income tax benefit was recognized for the years ended December 31, 2015 and 2014, as indicated below:

	2015			2014
Deferred tax benefit:
Federal	$	(1,307,000	)	$	(1,204,000	)
State		(115,000	)		(106,000	)
		(1,422,000	)		(1,310,000	)
Increase in valuation allowance		1,422,000			1,310,000
	$	-		$	-

A reconciliation of income tax computed at the U.S. statutory tax rate of 34% to the effective income tax rate is as follows:

	2015			2014
Statutory rate		34	%		34	%
State taxes		3			3
Permanent differences and other		(4	)		(7	)
Valuation allowance		(33	)		(30	)
Effective rate		-			-