Note 6 - Income Taxes

Through December 31, 2014, the Company incurred net operating losses for federal tax purposes of approximately $20,100,000. The net operating loss carry forward may be used to reduce taxable income through the years 2028 to 2034. The availability of the Company's net operating loss carry forward is subject to limitation if there is a 50% or more change in the ownership of the Company's stock.

A reconciliation of the expected tax computed at the statutory federal income tax rate to the provision for income taxes is as follows:

	2014		2013
Expected tax benefit at 34%	$	(2,481,000)	$	(1,797,000)
Change in valuation allowance		2,390,000		1,615,000
Other		91,000		182,000
Provision for income taxes	$	-	$	-

The net deferred tax asset at December 31, 2014 and 2013 was $7,080,000 and $4,690,000, respectively. A 100% valuation allowance has been established against the deferred tax assets as the utilization of the loss carry forward cannot reasonably be assured. Significant components of the deferred tax assets (liabilities), computed at the statutory federal tax rate of 34%, are approximately as follows:

	2014		2013
Net operating loss carry forwards	$	6,850,000	$	4,780,000
Accrued liabilities		310,000		30,000
Stock compensation		(20,000)		(30,000)
Depreciation		(40,000)		(80,000)
Prepaid expenses		(30,000)		(20,000)
Other		10,000		10,000
Deferred tax assets, net		7,080,000		4,690,000
Valuation allowance		(7,080,000)		(4,690,000)
Net deferred tax asset	$	-	$	-

Although the Company is not under examination, the tax years for 2011 and forward are subject to examination by United States tax authorities. The Company’s practice is to recognize interest and penalties related to income tax matters in income tax expense. As of December 31, 2014 and 2013, there was no accrued interest or penalties related to uncertain tax positions.