At December 31, 2013, the Company had federal and state income tax net operating loss carryforwards of approximately $74.4 million and $71.6 million,
respectively. The federal and state net operating loss carryforwards will expire through 2031 unless previously utilized. Under Section 382 of Internal Revenue
Code, if a corporation undergoes an "ownership change" generally defined as a greater than 50% change (by value) in its equity ownership over a three-year
period, the corporation's ability to use its post-change income may be limited. The Company performed a Section 382 study during the fourth quarter of 2010
and determined that it has more likely than not undergone five ownership changes as described in IRC Section 382.