Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes

10. Income Taxes

a. The Company and its subsidiary operate in several tax jurisdictions, and its income is subject to various rates of taxation. The Company has net losses for tax purposes in the United States and Brazil totaling approximately $12,067,183 and $7,169,598, respectively, which may be applied against future taxable income. Accordingly, there is no tax expense for the years ended December 31, 2011 and 2010. The potential tax benefits arising from these losses have not been recorded in the consolidated financial statements as a full valuation allowance has been recorded against them. The Company evaluates its valuation allowance requirements on an annual basis based on projected future operations. When circumstances change and this causes a change in management's judgment about the recoverability of deferred tax assets, the impact of the change on the valuation allowance is reflected in current operations. The right to claim the tax losses in the United States expire according to the following table:

Fiscal Year of Expiry	Amount $
2012		564,000
2018		331,000
2019		795,000
2020		550,000
2022		138,000
2023		90,000
2024		222,000
2025		457,000
2026		1,094,000
2027		800,000
2028		561,000
2029		479,000
2030		2,065,000
2031		3,921,183
		12,067,183

Tax losses carried forward in Brazil have no expiration date and are available to offset up to 30% of annual income before tax in any year.

b. The tax effects of temporary differences that give rise to the Company's net deferred tax asset are as follows:

	2011 $			2010 $
Tax loss carry forwards		6,540,506			5,180,000
Valuation allowance		(6,754,903	)		(5,294,000	)
Stock compensation expense		214,397			114,000
		-			-

c. The reconciliation of income tax computed at the federal statutory rate to income tax expense is as follows:

	2011 $			2010 $
Tax at statutory rate		(1,573,295	)		(783,000	)
Movement in deferred tax asset		212,349			743,000
Change in valuation allowance for deferred tax asset		1,460,903			-
Other		(99,957	)		40,000
Income tax expense	$	-		$	-