Annual report pursuant to Section 13 and 15(d)

Income Taxes

v2.4.0.8
Income Taxes
 12 Months Ended
Dec. 31, 2013
Income Taxes  
Income Taxes

10.  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

 

2013

 

2012

 

 

 

$

 

$

 

Deferred tax assets:

 

 

 

 

 

Net operating loss carryforwards

 

23,075,700

 

18,182,000

 

Charitable contributions

 

500

 

2,800

 

Inventory Reserves

 

144,000

 

365,600

 

Stock-based compensation

 

101,500

 

52,300

 

Total deferred tax assets

 

23,321,700

 

18,602,700

 

Deferred tax liabilities:

 

 

 

 

 

Depreciation

 

(84,100

)

(154,900

)

Amortization

 

121,000

 

(51,700

)

Total deferred tax assets (liabilities)

 

36,900

 

(206,600

)

Net deferred tax assets

 

23,358,600

 

18,396,100

 

Valuation allowance

 

(23,358,600

)

(18,396,100

)

 

As of December 31, 2013, the Company had net operating loss carry forwards of approximately $62 million to offset future taxable income which expire in various years through 2033. 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, 2013 and 2012. The valuation allowance increased by $4,962,500 and $3,015,100 during 2013 and 2012, 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 2013 due to incurrence of net operating losses.  The Company does not believe there are any additional tax refund opportunities currently available.