Annual report pursuant to Section 13 and 15(d)

Income Taxes

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Income Taxes
 12 Months Ended
Dec. 31, 2011
Notes to Financial Statements  
Income Taxes

Deferred Taxes

 

Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and operating losses and tax credit carryforwards. The significant components of net deferred income tax assets for the Company are:

 

    December 31,  
    2011   2010  
Deferred tax assets:          
Federal net operating loss carryforward   $ 12,213,348   $ 11,972,000  
Other     687,092     618,962  
Patent amortization     (13,334 )   (12,000 )
Deferred tax assets before valuation     12,887,106     12,578,962  
Valuation allowance     (12,887,106 )   (12,578,962 )
Net deferred income tax assets   $ —   $ —  

 

Generally accepted accounting principles requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company's ability to generate sufficient taxable income within the carryforward period. Because of the Company's history of operating losses, management has provided a valuation allowance equal to its net deferred tax assets.

 

Tax Carryforward

 

At December 31, 2011, the Company had net operating loss carryforwards of approximately $28,430,136 to reduce United States federal taxable income in future years. These carryforwards expire through 2030.