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INCOME TAXES

9 Months Ended

Sep. 30, 2014

NOTE 7 - INCOME TAXES

As of December 31, 2013, the Company had a net operating loss carry forward for income tax reporting purposes of approximately $3,800,000 that may be offset against future taxable income through 2033. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited. No tax benefit has been reported in the financial statements, because the Company believes there is a 50% or greater chance the carry forwards will expire unused. Accordingly, the potential tax benefits of the loss carryforwards are offset by a valuation allowance of the same amount.

	2013			2012
Net Operating (Profit) Losses	$	1,292,000		$	1,564,000
Valuation Allowance		(1,292,000	)		(1,564,000	)
	$	-		$	-

The provision for income taxes differ from the amount computed using the federal US statutory income tax rate as follows:

	2013			2012
Provision (Benefit) at US Statutory Rate	$	247,000		$	(206,000	)
State Income Tax		-
Depreciation and Amortization		(41,000	)		(68,000	)
Accrued Officer Compensation		-			-
Non-Deductible Stock Based Compensation		7,000			12,000
Other Differences		59,000			24,000
Increase (Decrease) in Valuation Allowance		(272,000	)		238,000
Income Tax Provision (Benefit)	$	-		$	-

The Company evaluates its valuation allowance requirements based on projected future operations. When circumstances change and cause a change in management’s judgment about the recoverability of deferred tax assets, the impact of the change on the valuation is reflected in current income.

The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and the Florida Department of Revenue for the years ending December 31, 2010 through 2013. The Company recognizes interest and penalties related to income taxes in income tax expense. The Company had incurred no penalties and interest for the years ended December 31, 2013 and 2012.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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