The Company calculates its deferred tax assets and liabilities using the federal tax rate of and the following effective state rates, net of Federal benefits: Idaho Utah and New York State/New York City

 

The tax effect of items that give rise to the deferred tax assets and liabilities are as follows:

 

In assessing the realization of deferred tax assets, management determines whether it is more likely than not some, or all, of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the carryforward period as well as the period in which those temporary differences become deductible. Management considers the reversal of taxable temporary differences, projected taxable income and tax planning strategies in making this assessment. Based upon historical losses and the possibility of continued losses over the periods that the deferred tax assets are deductible, management believes it is more likely than not that the Company will not realize the benefits of these deferred tax assets and thus recorded a valuation allowance against the entire deferred tax asset balance. The valuation allowance increased by and the years ended and respectively.

 

 

At the Company had net operating loss carry-forwards of for Federal income tax purposes and state and local income tax purposes. The Federal net operating loss carry-forwards are available to be utilized against future taxable income through fiscal year and state loss carry-forwards expire from through subject to substantial restrictions on the utilization of net operating losses in the event of an “ownership change” as defined by the Internal Revenue Code. Utilization of the Company’s Federal and state net operating loss carry-forwards are subject to limitations as a result of these restrictions. No amounts were provided for unrecognized tax benefits attributable to uncertain tax positions as of and

The Internal Revenue Code of as amended (the Code) provides for a limitation of the annual use of net operating losses following certain ownership changes (as defined by the Code) that could limit the Company’s ability to utilize these carryforwards. At this time, the Company has not completed a study to assess whether an ownership change under Section of the Code has occurred, or whether there have been multiple ownership changes since the Company’s formation, due to the costs and complexities associated with such a study. The Company have experienced various ownership changes, as defined by the Code, as a result of past financing transactions. Accordingly, the Company’s ability to utilize the aforementioned carryforwards be limited. Additionally, U.S. tax laws limit the time during which these carryforwards be applied against future taxes. Therefore, the Company not be able to take full advantage of these carryforwards for Federal or state income tax purposes  

A reconciliation of the differences between the effective and statutory income tax rates is as follows: