Quarterly report pursuant to sections 13 or 15(d)

INCOME TAXES

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INCOME TAXES
 6 Months Ended
Jun. 30, 2012
INCOME TAXES [Abstract]  
INCOME TAXES

NOTE 5 - INCOME TAXES:

 

At June 30, 2012 and December 31, 2011, components of net deferred tax assets, including a valuation allowance, are as follows:

 

    June 30,     December 31,  
    2012     2011  
Deferred tax assets:                
Non-deductible start-up costs   $ 549,000     $ 403,000  
Total deferred tax assets     192,000       141,000  
Less: Valuation Allowance     (192,000 )     (141,000 )
Net Deferred Tax Assets   $ -     $ -  

 

The valuation allowance for deferred tax assets as of June 30, 2012 and December 31, 2011 was $192,000 and $141,000, respectively. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The deferred tax asset is created as a result of the start-up expenses, which are not deductible for tax purposes and as a result create a basis difference. They will only become deductible if the Company comes out of the development stage. Management considers the projected future taxable income and tax planning strategies in making this assessment. As a result, management determined it was more likely than not the deferred tax assets would not be realized as of June 30, 2012 and December 31, 2011, and recorded a full valuation allowance.

 

Reconciliation between the statutory rate and the effective tax rate is as follows for the three and six months ended June 30:

 

    2012     2011  
Federal statutory tax rate     (35 )%     (35 )%
Change in valuation allowance     35 %     35 %
Effective tax rate     0.0 %     0.0 %