v2.4.0.6
Income Taxes
 12 Months Ended
Dec. 31, 2011
Notes to Financial Statements  
Note G - Income Taxes

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Deferred tax assets and valuation allowance at December 31, 2011 and 2010, respectively are as follows:

  For the Years Ended December 31,  
Deferred tax assets:  2011 2010
     
Unexercised stock options $                         38,000 $                      43,000
Net operating loss carry forward 6,049,000 5,248,000
Valuation allowance (6,087,000) (5,291,000)
  $                                   - $                                -

 

The components of income tax expense for years-ended December 31, 2011 and 2010 respectively are as follows:

 

  2011 2010
     
Current Federal tax $                                     -  $                           -
Current State tax                       -                       - 
Change in current year NOL (benefit) (796,000) (244,000)
True-up of prior year NOL (benefit) - (662,000)
          Change in valuation allowance                           796,000 906,000
  $                                      - $                             -

 

A provision for income taxes has not been made due to net operating loss carry-forwards of $17,904,000 and $16,371,000 at December 31, 2011 and 2010, respectively, which may be offset against future taxable income through 2031. No tax benefit has been reported in the financial statements. 

The actual provision for income tax differs from the statutory U.S. federal income tax rate for the years-ended December 31, 2011 and 2010, respectively as follows:

  For the Years Ended December 31,  
  2011 2010
     
Provision at US statutory rate of 34% $                      799,000 $               1,037,000
 Permanent differences (1,595,000) (1,281,000)
True-up of prior year NOL - (662,000)
Increase in valuation allowance 796,000 906,000
Ending Balance   $                                   -  $                             -

 

Current accounting guidance requires the Company to provide a reconciliation of the beginning and ending amount of unrecognized tax impacts related to the sustainability of tax positions taken in current and prior periods. 

As of December 31, 2011 the Company did not have any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months. 

The Company includes interest and penalties arising from the underpayment of income taxes in the consolidated statements of operations in the provision for income taxes.  As of December 31, 2011 and 2010, the Company had no accrued interest or penalties related to uncertain tax positions. 

The tax years that remain subject to examination by major taxing jurisdictions are those for the years ended December 31, 2009 through 2011.