INCOME TAXES

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

Note 2 - Income Taxes

Income tax expense for the years ended December 31, 2013 and 2012 consisted of the following:

	Year ended December 31,
	2013		2012
State franchise taxes	$	1,450	$	1,931
Federal taxes		0		0
Total	$	1,450	$	1,931

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets is composed primarily of the net loss carry forwards. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable losses, management believes it is more likely than not the Company will not realize the benefits of these deductible differences and has established a valuation allowance to fully reserve the deferred tax assets at December 31, 2013 and 2012. Additionally, the ultimate realizability of net operating losses may be limited by change of control provisions under Section 382 of the Internal Revenue Code. The Company’s income tax returns remain subject to examination for the years 2010 through 2013 for federal and state purposes.