Note 12 - Income Taxes

12 Months Ended

Dec. 31, 2012

Notes to Financial Statements

Income Taxes

The tax provision (benefit) for the years ended December 31, 2012 and 2011 consists of the following:

	December 31,
	2012			2011
Current					–
Deferred		(129,588	)		(338,390	)
The components of the deferred tax assets (liability) as of:
Net operating loss carryforward		7,486,772		$	7,505,059
Stock base compensation		430,305			139,853
Executive compensation		40,200			59,800
Total Deferred tax Asset		7,957,277			7,704,712
Valuation allowance for Deferred tax asset		7,957,277			(7,704,712	)
Deferred tax asset		–			–
Deferred tax liability:
Intangible Assets		(94,184	)		(223,771	)
Sec 481c		–			–
Net deferred tax long term		(94,184	)		(223,771	)
Net deferred tax	$	(94,184	)	$	(223,771	)

As of December 31, 2012 and 2011, the Company generated a net operating loss carry forwards of approximately $20,000,000 available expiring 2012-2030.

The provision for income taxes reported for the year ended December 31, 2012 and 2011.

	December 31,
	2012			2011
Provision (benefit) for taxes using statutory rate	$	(235,236	)	$	(1,939,044	)
state taxes, net of federal tax benefit		12,838			646,348
Permanent differences:
None deductable expense		92,810			2,247,002
Provision (Benefit) for income taxes	$	(129,588	)	$	(338,390	)

The Company operates in multiple state tax jurisdictions.  Tax positions are evaluated and liabilities are established for uncertain tax positions that may be challenged by local authorities and may not be supportable under examination.  Tax positions and liabilities are established in accordance with applicable accounting guidance on uncertainty in income taxes in light of changing facts and circumstances.  Based on current available information, the Company believes that a reasonable estimate cannot be made if challenged and not sustained.  Accordingly no provision has been made for the period ended December 31, 2012.

The Company’s 2009, 2010 and 2011 federal and state tax returns remain subject to examination by the respective taxing authorities.  In addition, net operating losses and research tax credits arising from prior years are also subject to examination at the time that they are utilized in future years. Neither the Company’s federal or state tax returns are currently under examination.