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INCOME TAXES

12 Months Ended

Dec. 31, 2013

NOTE 11 – INCOME TAXES

For the years ended December 31, 2013, 2012 and 2011, there was no provision for income taxes, current or deferred.

At December 31, 2013, we have a federal net operating loss carry forward of approximately $37,000,000 available to offset future taxable income through 2033.

At December 31, 2013, 2012, and 2011, we have state net operating loss carryforwards of approximately $35,000,000 available to offset future losses through 2033. We established valuation allowances equal to the full amount of the deferred tax assets because of the uncertainty of the utilization of the operating losses in future periods. We periodically assess the likelihood that we will be able to recover the deferred tax assets. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income.

Our deferred tax asset and liability as presented in the accompanying consolidated financial statements consist of the following:

	2013			2012			2011
Deferred Income Tax Assets:
Net operating losses	$	14,773,537		$	5,920,861		$	748,404
R&D Credit		547,511			186,346
Total deferred income tax asset		15,321,048			6,107,207			748,404
Valuation allowance		(15,321,048	)		(6,107,207	)		(748,404	)
Deferred Income Tax Assets, net	$	-0-		$	-0-		$	-0-

Our provision for income taxes differs from applying the statutory U.S. federal income tax rate to the income before income taxes. The primary differences result from deducting certain expenses for financial statement purposes but not for federal income tax purposes.

A reconciliation between taxes computed at the federal statutory rate and the consolidated effective tax rate is as follows:

	2013			2012			2011
Federal statutory tax rate		35.0	%		35.0	%		35.0	%
State tax rate, net of federal tax benefit		5.8	%		5.5	%		-0-	%
Adjustment in valuation allowances		(32.4	)%		(18.2	)%		(5.8	)%
Permanent and other differences		(8.4	)%		(22.3	)%		(29.2	)%
Provision (Benefit) for Income Taxes		-0-	%		-0-	%		-0-	%

- 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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