Annual report pursuant to section 13 and 15(d)

Income Taxes

v2.4.0.6
Income Taxes
 12 Months Ended
Dec. 31, 2011
Income Taxes [Abstract]  
Income Taxes

13. INCOME TAXES:

As of December 31, 2011, the Company had net operating loss carry forwards for federal and state income tax purposes of approximately $33,902,000 and $17,663,000, respectively, which expire between 2011 and 2031. As of December 31, 2010, the Company had net operating loss carry forwards for federal and state income tax purposes of approximately $29,923,000 and $17,547,000, respectively. Generally, these can be carried forward and applied against future taxable income. However, as a result of stock offerings and stock issued in connection with acquisitions, the Company's use of these NOLs may be limited under the provisions of Section 382 of the Internal Revenue Code of 1986, as amended. The Company has not evaluated the implications of Section 382 on its ability to utilize some or all of its NOLs.

Components of deferred tax assets (liabilities) are as follows:

 

     December 31,  
     2011     2010  

Accounts receivable

    $ 44,000      $ 13,000   

Inventories

      305,000        106,000   

Accrued expenses

      58,000        104,000   

Depreciation

      (74,000 )      (109,000 ) 

Intangible assets

      44,000        44,000   

Stock warrants

      687,000        579,000   

Other

      —          1,000   

Net operating loss carry forwards

      12,044,000        10,687,000   
  

 

 

    

 

 

  
     13,108,000        11,425,000   

Valuation allowance

      (13,108,000 )      (11,425,000 ) 
  

 

 

    

 

 

  
   $ —        $ —     
  

 

 

    

 

 

  

In accordance with FASB ASC 740 "Income Taxes", valuation allowances are provided against deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has evaluated its ability to realize the deferred tax assets on its balance sheet and has established a valuation allowance in the amount of $13,108,000 at December 31, 2011, an increase of approximately $1,683,000 over December 31, 2010.

 

The following is a reconciliation of tax computed at the statutory federal rate to the income tax expense in the statements of operations for the years ended December 31, 2011, and 2010:

 

     December 31,  
     2011     2010  
     Amount     %     Amount     %  

Tax benefit at statutory federal rate

    $ (1,859,000 )      (34.0 )    $ (2,724,000 )      (34.0 ) 

Deferred state tax benefit

      (21,000 )      (0.4 )      (30,000 )      (0.4 ) 

Change in valuation allowance

      1,682,000        30.8        2,744,000        34.2   

Goodwill impairment

      135,000        2.4        —          0.0   

Adjustment to net operating loss carryforwards

      53,000        1.0        (5,000 )      (0.0 ) 

Non-deductible expenses

      10,000        0.2        15,000        0.2   
  

 

 

    

 

 

    

 

 

    

 

 

  

Income tax expense

    $ —          —        $ —          —