Income Taxes

12 Months Ended

Dec. 31, 2011

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

13. Income Taxes

The large accumulated losses from past operations have resulted in the Company determining that the deferred tax assets associated with net operating loss carryforwards may expire prior to utilization. Although the Company had net income in 2011, it had net losses in previous years. Because of the uncertainty of realization of any tax assets, the Company provided a full valuation allowance against its net deferred tax assets at December 31, 2011 and 2010. Consequently, no benefit for deferred tax assets appears on the Company’s financial statements.

The domestic and foreign income tax expense (benefit) is summarized as follows:

	2011		2010
Provision for income taxes
US Federal	$	-	$	-
US States		7,100		9,600
United Kingdom		-		-
Current provision		7,100		9,600
Change in deferred income taxes		-		-
Total provision for income taxes	$	7,100	$	9,600

In order to clearly reflect its tax and economic position, the Company changed its assumptions in 2011 regarding the tax effects of utilizing net operating losses, its investment in its subsidiary in the United Kingdom, and the timing of repatriation of any future profits from that subsidiary. These changes in assumptions reduced the Company’s gross tax assets.

The difference between the actual income tax provision and the tax provision computed by applying the statutory US federal and United Kingdom income tax rates to earnings before taxes is attributable to the following:

	2011			2010
US Federal income tax expense (benefit) at 34%	$	88,400		$	65,100
US State income tax expense (benefit)		1,900			56,500
United Kingdom income tax expense (benefit) at 20%		(42,100	)		(252,100	)
Nondeductible expenses		22,600			23,400
Change in tax assumptions		1,334,300			(776,300	)
Change in valuation allowance		(1,398,000	)		893,000
Total	$	7,100		$	9,600

Temporary differences and carryforwards that give rise to deferred tax assets and liabilities are as follows:

	2011			2010
Benefit of net operating loss carryforwards	$	5,299,100		$	6,501,200
Undistributed earnings of UBIUK		-			(352,800	)
Investment in UBIUK		-			366,800
Depreciation and amortization		(1,677,000	)		(1,742,700	)
Other		75,500			323,100
Subtotal		3,697,600			5,095,600
Less valuation allowance		(3,697,600	)		(5,095,600	)
Total	$	-		$	-
Change in valuation allowance	$	(1,398,000	)	$	893,000

The Company has net operating losses available for carry forward. The US federal net operating losses total approximately $13,000,000 and expire from 2017 through 2029. The US state operating losses total approximately $1,200,000 and expire from 2012 through 2029. The Company’s United Kingdom operating losses total approximately $3,700,000 and they do not expire.

Tax years that remain open for examination by the Internal Revenue Service and the US states include 2008, 2009, 2010, and 2011. The 2011 returns are expected to be filed in the summer of 2012. California may still examine 2007 because of its longer statute of limitations. Additional years may be examined in the event of criminal tax fraud, and any year may be subject to examination to the extent that the Company utilizes the net operating losses from those years in its current or future tax returns.