Income Taxes

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Income Taxes

5. Income Taxes

Income tax benefit reconciled to tax calculated at statutory rates is as follows:

	2011			2010
Federal tax (benefit) at statutory rate	$	(665,257	)	$	(941,240	)
Expiration of net operating loss carryforwards		1,794,072			486,462
Expiration of tax credits		33,000			114,000
Change in valuation allowance		(1,162,821	)		339,840
Other		1,006			938
Provision for income taxes, net	$	––		$	––

At December 31, 2011 and 2010, the components of the Company’s deferred taxes are as follows:

	2011			2010
Deferred tax assets (liabilities)
Net operating loss carryforwards	$	8,209,728		$	9,654,193
Tax credits		––			33,000
Accrued compensation		29,431			32,448
Depreciation		173			(4,406	)
Stock-based compensation		276,929			196,743
Accrued related party interest		688,827			460,692
Other		7,649			2,888
Total		9,212,737			10,375,558
Less:  Valuation allowance		(9,212,737	)		(10,375,558	)
Net deferred tax asset	$	––		$	––

The Company has the following net operating loss tax carryforwards available at December 31, 2011:

Year of	Net Operating
Expiration	Losses
2012		1,570,000
2013		1,425,000
2014		1,234,000
2020		2,849,000
2021		4,168,000
2023		1,217,000
2024		646,000
2025		589,000
2026		873,000
2027		2,607,000
2028		2,512,000
2029		2,196,000
2030		1,232,000
2031		1,028,000
Total	$	24,146,000

In the event of a significant change in the ownership of the Company, the utilization of such loss and tax credit carryforwards could be substantially limited.