Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v2.4.1.9
INCOME TAXES
12 Months Ended
Dec. 31, 2014
Notes to Financial Statements  
Note 18 - INCOME TAXES

The components of the income tax provisions for 2014 and 2013 are as follows:

 

    2014     2013  
Current provision:            
Federal   $ -     $ -  
State     -       1,600  
                 
Deferred benefit:                
Federal     (639,913 )     (946,991 )
State     (112,926 )     (246,076 )
      (752,839 )     (1,193,068 )
Change in valuation allowance     752,839       1,193,068  
Total Provision   $ -     $ 1,600  

 

The difference between the income tax provision and income taxes computed using the U. S. federal income tax rate of 34% consisted of the following:

 

    2014     2013  
Provision at statutory rate     34.0 %     34.0 %
State taxes, net of federal benefit     5.8 %     5.8 %
Nondeductible and other items     (8.9 %)     (8.8 %)
Change in valuation allowance     (25.9 %)     (31.1 %)
Total     (0.0 %)     (0.1 %)

 

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Significant components of the Company’s deferred taxes as of December 31, 2014 and 2013 are as follows:

 

    2014     2013  
Deferred tax assets:            
Net operating loss carry forwards   $ 1,427,000     $ 1,239,529  
Share-based compensation     783,494       86,806  
Accrual to cash     384,886       622,243  
Other     65,418       11,297  
Total deferred tax assets     2,660,800       1,959,875  
Valuation allowance     (2,521,561 )     (1,768,722 )
      135,239       191,153  
                 
Deferred tax liabilities:                
Tax deductible licensing agreement     (135,233     (187,645 )
Accrual to cash     -       -  
Other     -       (3,509 )
                 
Total deferred tax liabilities     (135,239     (191,153 )
                 
Net deferred tax assets (liabilities)   $ -     $ -  

 

A full valuation allowance has been provided against the Company’s deferred tax assets at December 31, 2014 as the Company believes it is more likely than not that sufficient taxable income will not be generated to realize these temporary differences.

 

The Company has Federal net operating losses (NOLs) of approximately $3.6 million which begin to expire in the years beginning in 2029. Pursuant to Section 382 of the Internal Revenue Code, use of the Company’s NOLs and credit carry forwards may be limited if the Company experiences a cumulative change in ownership of greater than 50% in a moving three-year period.

 

The Company also has federal credits that begin to expire 2028 and state tax credits that may be carried forward indefinitely.

 

The Company provides for uncertain tax positions when such tax positions do not meet the recognition thresholds or measurement standards as set forth in ASC Topic 740. Income Taxes, regarding accounting for uncertainty in income taxes. Amounts for uncertain tax positions are adjusted in periods when new information becomes available or when positions are effectively settled. There are no unrecognized benefits related to uncertain tax positions as of December 31, 2014. The Company does not anticipate that there will be material change in the liability for unrecognized tax benefits within the next 12 months.