v2.4.0.6
INCOME TAXES
 6 Months Ended
Dec. 31, 2012
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 9.              INCOME TAXES

 

The Company did not incur any income tax expense for the quarter ended December 31, 2012. At December 31, 2012, $3,719,799 of federal and state net operating losses were available to the Company to offset future taxable income, which will expire in 2033. Given the short history of the Company and the uncertainty as to the likelihood of future taxable income, the Company has recorded a 100% valuation reserve against the anticipated recovery from the use of the net operating losses created at the inception or generated thereafter. The Company will evaluate the appropriateness of the valuation allowance on an annual basis and adjust the allowance as considered necessary.

 

The Company’s effective tax rate differs from the federal statutory rate of 34% primarily due to the impact of state income taxes and the valuation allowance recorded against its deferred tax assets.

 

Statutory rate  34.0%
State income taxes  5.8%
Valuation allowance  (39.8)%
Total  0.0%

 

The principal components of deferred tax assets and (liabilities) are as follows as of December 31, 2012 on a tax effected basis:

 

Net operating losses carryforward $1,480,480 
Start-up costs, net of amortization  63,934 
Gross deferred taxes $1,544,414 
Valuation allowance  (1,544,414)
Net deferred taxes $- 

 

The Company follows the provisions of FASB ASC Subtopic 740-10-65-1, Income Taxes. As of December 31, 2012, the Company did not recognize any liability for unrecognized tax benefits. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the period presented. The Company had no accruals for interest and penalties at December 31, 2012. The period from April 26, 2012 (inception) through June 30, 2012 is subject to examination by the federal and state taxing authorities. There are no income tax examinations currently in process and as of the date of this report.