Income Taxes

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income Taxes

Note 12 - Income Taxes

Due to our substantial operating losses and the valuation allowance applied against our deferred tax assets, we have not recorded any income tax expense or benefit.

	December 31,		December 31,
	2014		2013
Current:
Federal	$	-	$	-
State		-		-
		-		-
Deferred:
Federal		-		-
State		-		-
		-		-
Provision for income tax, net	$	-	$	-

Income taxes related to our loss from operations differ from the amount computed using the federal statutory income tax rate as follows for the years ended December 31, 2014 and 2013:

	2014		2013
Tax benefit computed at the federal statutory rate	$	(5,701,569)	$	(8,466,361)
State income tax (benefit), net of federal income tax effect		(814,510)		(1,209,480)
Nondeductible permanent differences		(143,271)		6,042,555
Change in valuation allowance		6,659,350		3,633,286
Provision for income taxes	$	-	$	-

Deferred income taxes result from temporary differences in the recognition of income and expenses for financial reporting purposes and for tax purposes. At December 31, 2014 and 2013, we had available net operating loss carry forwards of $37.9 million and $25.7 million, respectively that expire through 2034.

During 2014 the Company has experienced a significant change in capital structure. As a result of the increase in shares outstanding, the Company believes that a greater than 50% change in ownership as defined in section 382 of the IRC  has occurred and therefore the Company’s ability to utilize it’s net operating losses may be limited. The Company believes that a Sec. 382 study will confirm a change has occurred and therefore the ability of the Company to use its net operating losses will be limited on an annual basis based on the value of the Company at the time of the ownership change. Such limitation will have the effect of limiting on an annual basis the amount of net operating losses the Company can utilize as an offset to future taxable income.

Nondeductible permanent differences at December 31, 2014 and 2013 result from the recognition of the changes in fair value of derivative liabilities, warrants exchanged for common stock, and impairment charge for intangible assets for financial reporting purposes, but will not be a deduction or income for tax purposes.

As of December 31, 2014 and 2013, our deferred tax assets (liabilities) are as follows:

	2014		2013
Deferred Tax Assets:
Non-cash interest expense	$	2,828,837	$	1,677,305
Share-based compensation		4,061,677		3,833,855
Impairment of intangible assets		218,300		-
Other		254,740		254,740
Net operating loss carry forward		15,159,830		10,098,134
Less: Valuation allowance		(22,220,990)		(15,561,640)
		302,394		302,394
Deferred Tax Liabilities:
Property and equipment		(302,394)		(302,394)
Net deferred asset (liability)	$	-	$	-

We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. We are current with our filing of our federal and state tax returns. Our income tax returns are open to examination by federal and state authorities, based on statute of limitations, which is three years. We do not have any amount recorded for any unrecognized tax benefits as of December 31, 2014 and 2013, nor did we record any amount for the implementation of ASC 740. Our policy is to record estimated interest and penalty related to underpayment of income taxes or unrecognized tax benefits as a component of our income tax provision. During the years ended December 31, 2014 and 2013, we did not recognize any interest or penalties in our statement of operations and there are no accruals for interest or penalties at December 31, 2014 or 2013.