Note 9. Income Taxes

3 Months Ended

Jun. 30, 2014

Notes

Note 9. Income Taxes

Note 9. Income Taxes

A reconciliation of U.S. statutory federal income tax rate to the effective rate follows:

	June 30, 2014			June 30, 2013
U.S. statutory federal rate, graduated		34.00	%		34.00	%
State income tax rate, net of Federal		3.6	%		3.6	%
Permanent book-tax differences		0	%		0	%
Net operating loss (NOL) for which no tax benefit was available.		-37.6	%		-37.6	%
Net tax rate		0.00	%		0.00	%

At June 30, 2014, deferred tax assets consisted of a net tax asset of approximately $7,520,000, due to operating loss carry forwards of approximately $20,000,000, which was fully allowed for, in the valuation allowance of $7,520,000.  The valuation allowance offsets the net deferred tax asset for which it was more likely than not that the deferred tax assets will not be realized.  The net operating loss carry forwards expire through the year 2034.

The valuation allowance is evaluated at the end of each fiscal year, considering positive and negative evidence about whether the deferred tax asset will be realized.  At that time, the allowance will either be increased or reduced; reduction could result in the complete elimination of the allowance if positive evidence indicates that the value of the deferred tax assets was no longer impaired and the allowance was no longer required.