Income Taxes

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Taxes

14. 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. 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, 2013 and 2012. Consequently, no benefit for deferred tax assets appears on the Company’s financial statements.

The Company’s income tax expense is summarized as follows:

	2013		2012
Provision for income taxes
US Federal	$	-	$	-
US States		4,100		2,700
Current provision		4,100		2,700
Change in deferred income taxes		-		-
Total provision for income taxes	$	4,100	$	2,700

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:

	2013			2012
US Federal income tax expense (benefit) at 34%	$	(517,600	)	$	(26,600	)
US State income tax expense (benefit)		(77,200	)		21,800
United Kingdom income tax expense (benefit) at 20%		129,900			127,900
Non deductible expenses		23,400			17,400
Other		4,800			1,800
Change in valuation allowance		440,800			(139,600	)
Total	$	4,100		$	2,700

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

	2013			2012
Benefit of net operating loss carryforwards	$	5,572,100		$	5,282,300
Depreciation and amortization		(1,653,800	)		(1,827,900	)
Other		80,500			103,600
Subtotal		3,998,800			3,558,000
Less valuation allowance		(3,998,800	)		(3,558,000	)
Total	$	-		$	-
Change in valuation allowance	$	440,800		$	(139,600	)

The Company has net operating losses available for carry forward. The US Federal net operating losses total approximately $14,537,400 and expire beginning 2017 and ending in 2033. The US state operating losses total approximately $1,405,500 and expire beginning in 2014 and ending in 2033. The Company’s UK operating losses total approximately $2,525,400 and they do not expire.

Tax years that remain open for examination by the Internal Revenue Service and the US states include 2010, 2011, and 2012; the Company expects to file its 2013 returns in the summer of 2014. California may still examine 2009 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.