Income Taxes

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income Taxes

16. 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, 2014 and 2013. Consequently, no benefit for deferred tax assets appears on the Company’s financial statements.

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

	2014		2013
Provision for income taxes
US Federal	$	-	$	-
US States		-		4,100
Current provision		-		4,100
Change in deferred income taxes		-		-
Total provision for income taxes	$	-	$	4,100

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:

	2014			2013
US Federal income tax expense (benefit) at 34%	$	(828,000	)	$	(517,600	)
US State income tax expense (benefit)		(136,100	)		(77,200	)
United Kingdom income tax expense (benefit) at 20%		179,100			129,900
Nondeductible expenses		13,300			23,400
Expiration of net operating loss carryforwards		293,500			-
Other		147,000			4,800
Change in valuation allowance		331,200			440,800
Total	$	-		$	4,100

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

	2014			2013
Benefit of net operating loss carryforwards	$	5,601,600		$	5,572,100
Depreciation and amortization		(1,630,400	)		(1,653,800	)
Other		358,800			80,500
Subtotal		4,330,000			3,998,800
Less valuation allowance		(4,330,000	)		(3,998,800	)
Total	$	-		$	-
Change in valuation allowance	$	331,200		$	440,800

The Company has net operating losses available for carry forward. The US Federal net operating losses total approximately $15,569,200 and expire beginning 2018 and ending in 2034. The US state operating losses total approximately $1,282,200 and expire beginning in 2015 and ending in 2034. The Company’s UK operating losses total approximately $928,400 and do not expire.

Tax years that remain open for examination by the Internal Revenue Service and the US states include 2011, 2012, and 2013; the Company expects to file its 2014 returns in the summer of 2015. California may still examine 2010 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.