3. INCOME TAXES

12 Months Ended

Dec. 31, 2014

Notes to Financial Statements

3. INCOME TAXES

3. INCOME TAXES

The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes from continuing operations were as follows:

	2014	2013
Statutory federal income tax rate	34%	34%
State taxes, net of federal benefit	0%	0%
Permanent differences	0%	1%
Change in valuation allowance	-34%	-35%
	0%	0%

Significant components of deferred income tax assets and liabilities are as follows:

(In thousands)		2014		2013
Net operating loss carryforwards	$	4,387	$	4,476
Other		299		299
Total, net		4,686		4,775
Valuation allowance		(4,686)		(4,775)
Deferred tax assets, net	$	-	$	-

At December 31, 2014, the Company has Federal and State net operating loss carryforwards ("NOL") available to offset future taxable income of approximately $11,517,000 and $5,208,000, respectively. These NOLs will begin to expire in the year ending December 31, 2028. These NOL's may be subject to various limitations on utilization based on ownership changes in the prior years under Internal Revenue Code Section 382. Based on its analysis, management does not believe that an ownership change has occurred that would trigger such a limitation.

The Company periodically evaluates the likelihood of the realization of deferred tax assets, and adjusts the carrying amount of the deferred tax assets by the valuation allowance to the extent the future realization of the deferred tax assets is not judged to be more likely than not. Management considers many factors when assessing the likelihood of future realization of the Company's deferred tax assets, including its recent cumulative earnings experience by taxing jurisdiction, expectations of future taxable income or loss, the carryforward periods available to the Company for tax reporting purposes, and other relevant factors.

At December 31, 2014 and 2013, based on the weight of available evidence, management determined that it was unlikely that the Company's deferred tax assets would be realized and have provided for a full valuation allowance associated with the net deferred tax assets.

The Company periodically analyzes its tax positions taken and expected to be taken and has determined that since inception there has been no need to record a liability for uncertain tax positions.

The Company classifies income tax penalties and interest, if any, as part of selling, general and administrative expenses in the accompanying consolidated statements of operations. There was no accrued interest or penalties as of December 31, 2014 or 2013.

The Company is neither under examination by any taxing authority, nor has it been notified of any impending examination. The Company's tax years for its Federal and State jurisdictions which are currently open for examination are the years of 2007 - 2013.