Annual report pursuant to Section 13 and 15(d)

6. Income Taxes

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6. Income Taxes
 12 Months Ended
Dec. 31, 2013
Income Tax Disclosure [Abstract]  
6. Income Taxes

 

The components of the benefit for income taxes are as follows:

 

       We did not record an income tax benefit or provision for the year ended December 31, 2013. We recorded a $2,014 income tax benefit for the year ended December 31, 2012.

 

        Significant items making up the deferred tax assets and deferred tax liabilities as of December 31, 2013 and December 31, 2012 are as follows:

 

    December 31,  
Current deferred taxes   2013     2012  
          Inventories   $ 19,640     $ 19,723  
          Accounts Receivable allowance     -       -  
          Other accruals     23,050       45,053  
           Less: valuation allowance     (42,690 )     (64,776 )
                   Total current deferred tax assets   $ -     $ -  
Long term deferred taxes:                
Accelerated tax depreciation   $ 29,511     $ 32,686  
Non-cash, stock-based compensation, nonqualified     387,708       388,506  
Goodwill and intangibles     (14,337 )     (33,580 )
Operating loss carry forwards and tax credits     8,938,681       7,643,661  
Less: valuation allowance     (9,341,563 )     (8,031,273 )
Total long term deferred tax assets (liabilities), net     -       -  
Total net deferred tax liabilities   $ -     $ -  

 

A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. Accordingly, a valuation allowance was established in 2013 and 2012 for the full amount of our deferred tax assets due to the uncertainty of realization. We believe based on our projection of future taxable operating income for the foreseeable future, it is more likely than not that we will not be able to realize the benefit of the deferred tax asset at December 31, 2013.

 

We have net operating loss carry-forwards for federal income tax purposes of $17,668,501 as of December 31, 2013. Included in these numbers are loss carry-forwards that were obtained through the acquisition of BioSeq, Inc. and are subject to Section 382 NOL limitations. These net operating loss carry-forwards expire at various dates from 2014 through 2033.

 

We had net operating loss carry-forwards for state income tax purposes of approximately $19,959,028 at December 31, 2013. These net operating loss carry-forwards expire at various dates from 2014 through 2033.

 

We have research

 

We have research  and development tax credit carryforwards for federal income tax purposes of approximately $940,000 as of December 31, 2013, and research and development tax credit carryforwards for state income tax purposes of approximately $140,000 as of December 31, 2013. The federal credit carryforwards expire at various dates from 2014 through 2033. The state credit carryforwards expire at various dates from 2014 through 2028.

 

In addition, we have federal alternative minimum tax credit carryforwards for federal income tax purposes of approximately $217,000 as of December 31, 2013. These credits do not expire.

 

Our effective income tax (benefit) provision rate was different than the statutory federal income tax (benefit) provision rate as follows:

 

    For the Year Ended  
    December 31,  
    2012     2012  
Federal tax (benefit) provision rate     34 %     34 %
Permanent differences     (3 ) %     (1 ) %
State tax expense     0 %     0 %
Refundable AMT and R&D tax credit     0 %     0 %
Net operating loss carry back     0 %     0 %
Valuation allowance     (31 ) %     (33 ) %
Effective income tax (benefit) provision rate from continuing operations     0 %     0 %