Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

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Income Taxes
 6 Months Ended
Jun. 30, 2011
Income Taxes [Text Block] Note 5. Income Taxes

              Our tax provision is determined using an estimate of our annual effective tax rate adjusted for discrete items, if any, that are taken into account in the relevant period. The 2011 and 2010 annual effective tax rate is estimated to be at a combined 40% for the U.S. federal and states statutory tax rate.

              As of June 30, 2011 and December 31, 2010, there were no tax contingencies recorded.

 

   Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting, and the amounts recognized for income tax purposes. The significant components of deferred tax assets (at a 40% effective tax rate) as of June 30, 2011 and December 31, 2010 respectively, are as follows:

Deferred Tax Assets Total Amount   Deferred Tax Asset Amount  
  2011   2010   2011   2010  
Capitalized start-up costs $  5,845,739   $  6,101,739   $  2,338,296   $  2,440,696  
Stock-based compensation   20,632,414     20,073,918     8,252,966     8,029,567  
Net operating loss carry-forward   27,234,857     24,992,683     10,893,943     9,997,073  
Less: valuation allowance   (53,713,010 )   (51,168,340 )   (21,485,205 )   (20,467,336 )
  $  --   $  --   $  --   $  --  

              We have a net operating loss carry-forward for federal and state tax purposes of approximately $27 million at June 30, 2011 that is available to offset future taxable income, that will begin to expire in the year 2021. For financial reporting purposes, no deferred tax asset was recognized because at June 30, 2011 and December 31, 2010 substantially all of the net operating losses are presently expected to expire unused. As a result, the amount of the deferred tax assets considered realizable was reduced 100% by a valuation allowance. The change in the valuation allowance was approximately $1.0 million and $3.1 million for the six months ended June 30, 2011 and the year ended December 31, 2010, respectively. Many of the Company’s operating expenses in its 2007 and 2006 tax years were classified under the Internal Revenue Code as capitalized “Start-up Costs” which were not deductible for tax purposes until 2008.

              The Company files a consolidated tax return with its subsidiaries.