General form of registration statement for all companies including face-amount certificate companies

Income Taxes

v2.4.0.8
Income Taxes
 12 Months Ended
Dec. 31, 2012
Income Taxes
11. Income Taxes

The Company has temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and their respective income tax basis, as measured by enacted state and federal rates as follows:

 

December 31    2012     2011  

Deferred tax assets:

    $        $     

Net operating loss carryforwards

      18,182,000        15,065,000   

Charitable contributions

      2,800        3,000   

Inventory Reserves

      365,600        163,000   

Stock-based compensation

      52,300        361,000   
  

 

 

    

 

 

  

Total deferred tax assets

      18,602,700        15,592,000   
  

 

 

    

 

 

  

Deferred tax liabilities:

     

Depreciation

      (154,900 )      (160,000 ) 

Amortization

      (51,700 )      (51,000 ) 
  

 

 

    

 

 

  

Total deferred tax liabilities

      (206,600 )      (211,000 ) 
  

 

 

    

 

 

  

Net deferred tax assets

      18,396,100        15,381,000   
  

 

 

    

 

 

  

Valuation allowance

      (18,396,100 )      (15,381,000 ) 
  

 

 

    

 

 

  

As of December 31, 2012, the Company had net operating loss carry forwards of approximately $48.3 million to offset future taxable income which expire in various years through 2031. A valuation allowance is recorded to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that a portion or none of the deferred tax assets will be realized. After consideration of all the evidence, including reversal of deferred tax liabilities, future taxable income and other factors, management has determined that a full valuation allowance is necessary as of December 31, 2012 and 2011. The valuation allowance increased by $3,015,100 and $3,572,000 during 2012 and 2011, respectively.

 

The net income tax benefit of approximately $738,000 for 2012 was the result of the Company’s ability to utilize net operating losses and franchise tax adjustments which resulted in tax refunds. The Company had no income tax expense or income tax benefit for 2011 due to incurrence of net operating losses. The Company does not believe there are any additional tax refund opportunities currently available.