7. INCOME TAXES

9 Months Ended

Sep. 30, 2011

Notes to Financial Statements

7. INCOME TAXES

For income tax purposes the Company has net operating loss carry forwards of $21,856,026 as of December 31, 2010 that may be used to offset future taxable income.  In the instance of future corporate acquisitions, the net operating losses may be used to offset the future taxable income of a qualifying subsidiary corporation which meets IRS regulations governing such situations.  The losses have accumulated since 1998 and they will start to expire in 2018.

The components of the net deferred tax asset as of December 31, 2010 are as follows:

Effect of net operating loss carry forward	$	9,179,531
Less evaluation allowance		(9,179,531	)
Net deferred tax asset	$	-

The components of income tax expense (benefit) are as follows:

	Period ended
	September 30,			September 30,
	2011			2010
Net loss per financial statements, which approximates net loss per income tax returns	$	(492,247	)	$	(294,065	)
Income tax expense (benefit) applying prevailing Federal and state income tax rates		(206,744	)		(123,507	)
Less valuation allowance		206,744			123,507
Net income tax expense (benefit)	$	-		$	-

Net income tax benefit is not recognized at this time because there is no reasonable expectation that the benefit will be realized in the future.