Note 9 - Income Taxes

12 Months Ended

Dec. 31, 2011

Notes To Financial Statements

Income Tax Disclosure [Text Block]

9. Income Taxes

Deferred income 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 reporting purposes. The Company’s deferred tax asset of approximately $7,970,000 and $8,790,000 at December 31, 2011 and 2010 respectively, was subject to a valuation allowance of $7,970,000 and $8,790,000 at December 31, 2011 and 2010 respectively, because of uncertainty regarding the Company’s ability to realize future tax benefits associated with the deferred tax assets. Deferred tax assets were comprised primarily of net operating loss carryovers under the cash method of accounting used by the Company for federal income tax reporting. The valuation allowance decreased by $820,000 in 2011 and decreased by $390,000 in 2010, due to the changes in the Company’s net operating loss carryover amounts.

At December 31, 2011, the Company has net operating loss carryforwards of approximately $23,445,000 for federal income tax purposes expiring in 2012 through 2031.  The ability of the Company to utilize these carryforwards may be limited should changes in stockholder ownership occur.

The difference between the reported income tax provision and the benefit normally expected by applying the statutory rate to the loss before income taxes results from the change during 2011 and 2010 of the deferred tax asset valuation allowance. As a result, the reported effective tax rate is 0%.