Annual report pursuant to section 13 and 15(d)

PROVISION FOR INCOME TAXES

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PROVISION FOR INCOME TAXES
12 Months Ended
Dec. 31, 2011
Notes to Financial Statements  
PROVISION FOR INCOME TAXES

 

9.             PROVISION FOR INCOME TAXES

 

Temporary differences that give rise to significant deferred tax assets are as follows:

  

    December 31,  
    2011     2010  
Start-up costs   $ 21,786     $ 21,786  
Net operating loss carryforward     466,803       133,703  
Valuation allowance     (488,589 )     (155,489 )
Net deferred tax asset   $ -     $ -  

 

As of December 31, 2011 and 2010, the Company had a deferred tax asset of $21,786 related to start-up costs which are amortizable for tax purposes.  The Company also had a deferred tax asset related to net operating loss carryforwards of $1,213,284 and $ 386,116 that expire through 2031 as of December 31, 2011 and 2010, respectively.

 

The Company has provided a full valuation allowance for deferred tax assets since, based on the weight of available evidence, it is more likely than not that these benefits will not be realized. During 2011, the Company increased its valuation allowance by $333,100 due to the continued likelihood that realization of any future benefit from deductible temporary differences and net operating loss carryforwards cannot be sufficiently assured at December 31, 2011.

  

The primary factors affecting the Company’s income tax rate for the years ended December 31, 2011 and 2010 are as follows:

 

    2011     2010  
Tax benefit at U.S. statutory rate     (34.0 %)     (34.0 %)
State tax benefit     (6.3 %)     (6.3 %)
Valuation allowance     40.3 %     40.3 %
      0.0 %     0.0 %

  

The Company applies the provisions of Financial Accounting Standard Board (FASB) Accounting Standard Codification (ASC) 740-10, Income Taxes, (originally issued as FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes).  The Company has not recognized any liability for unrecognized tax benefits and does not believe there is any uncertainty with respect to its tax position.  The Company’s policy with respect to unrecognized tax benefits is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.