Income Taxes

6 Months Ended

Jun. 30, 2012

Income Taxes

Note 11 - Income Taxes

Due to our substantial operating losses and the valuation allowance applied against our deferred tax assets, we have not recorded any income tax expense or benefit. Income tax benefit attributable to loss before income taxes differed from the amounts computed by applying the United States of America federal tax rate of 40% to loss before income taxes as a result of the following:

	June 30,			December 31,
	2012			2011
Current:
Federal	$	-		$	-
State		-			-
		-			-
Increase in valuation allowance		(1,480,000	)		(1,260,000	)
Benefit of operating loss carry forward		1,480,000			1,260,000
Provision for income taxes, net	$	-		$	-

	June 30,			December 31,
	2012			2011
Statutory federal income tax rate		40.0	%		40.0	%
Increase in valuation allowance		(40.0	)%		(40.0	)%
Effective tax rate		0.0	%		0.0	%

Deferred income taxes result from temporary differences in the recognition of income and expenses for the financial reporting purposes and for tax purposes. At June 30, 2012, we had available net operating loss carry forwards of approximately $16.6 million that expire through 2032. Our ability to utilize our net operating loss carry forwards is uncertain and thus a valuation allowance has been provided against our net deferred tax asset. Due to the changes in ownership over the prior periods from debt conversions, equity financings and the merger transaction, we may have triggered a Section 382 limitation on the utilization of such net operating loss carry forwards. In addition, we have not remained current with our federal and state tax returns. The net deferred tax assets and liabilities are comprised of the following:

	June 30,			December 31,
	2012			2011
Deferred tax assets:
Current	$	-		$	-
Non-current		6,640,000			5,160,000
		6,640,000			5,160,000
Less valuation allowance		(6,640,000	)		(5,160,000	)
Net deferred income tax asset	$	-		$	-