As of January 31, 2013, the Company had net operating loss carry forwards of approximately $459,917 that may be available to reduce future years’ taxable income in various amounts through 20321. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.

The provision for Federal income tax consists of the following for the six months ended January 31, 2013 and 2012:

The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows as of January 31, 2013 and July 31, 2012:

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of $409,035 for Federal income tax reporting purposes are subject to annual limitations. Should another change in ownership occur net operating loss carry forwards may be further limited as to use in future years.