Annual report pursuant to Section 13 and 15(d)

Income Taxes

Income Taxes
12 Months Ended
Dec. 31, 2014
Income Tax Disclosure [Abstract]  
Income Taxes



The Company uses the liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes.


During the years ended December 31, 2014 and 2013, the Company incurred net losses, and, therefore, had no tax liability. The net deferred asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is approximately $14,791,000 and $8,694,000, respectively as of December 31, 2014 and 2013, and will expire in years 2020 through 2034.


Deferred tax assets consist of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability.


Deferred tax assets consisted of the following as of:


    December 31, 2014     December 31, 2013  
Net operating loss carry forwards   $ 5,090,000     $ 3,651,550  
Valuation allowance     (5,090,000 )     (3,651,550 )
    $ -     $ -  


In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carry back and carry forward periods), projected future taxable income, and tax-planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deductible differences. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.


The reconciliation of the results of applying the Company’s effective statutory federal tax rate of 35% for the years ended December 31, 2014 and 2013 to the Company’s provision for income taxes follows:


    December 31, 2014     December 31, 2013  
Federal income tax rate     31.8 %     34 %
State income tax     6.5 %     8 %
Charge for deferred tax asset     (38.3) %     (42) %
      - %     - %


The Company’s income tax filings are subject to audit by various taxing authorities. For federal and state tax purposes, the Company’s 2011 through 2014 tax years remain open for examination by the tax authorities under the normal three year statute of limitations. See Note 21 for the disclosure of the Notice from the Internal Revenue Service to examine the Company’s 2011, 2012 and 2013 federal tax returns.