Crucial 2011 Annual Report Download - page 202

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51
INOTERA MEMORIES, INC.
NOTES TO FINANCIAL STATEMENTS
Additional US GAAP disclosures
According to originally amended Income Tax Act publicly announced on May 27, 2009, the
statutory income tax rate has
been reduced from 25% to 20% commencing from 2010. Also, based on the amended Income Tax Act publicly announced
on June 15, 2010, the statutory income tax rate has been reduced further from 20% to 17% commencing from 2010. For these
reasons, the Company had written down the deferred tax assets of approximately $1,046,077 and $1,743,461 against the
related valuation allowance for deferred tax assets as of December 31, 2009 and 2010, respectively, for the effect in the
reduction of such income tax rate.
The valuation allowance for deferred tax assets are allocated on a pro-rata basis between gross current and non-
current
deferred tax assets as follows:
Under US GAAP the Company incurred a significant net loss for the year ended December 31, 2010, had a significant
accumulated deficit, and its total current liabilities exceeded its total current assets by $52,812,953 at December 31, 2010. These
conditions and facts initially raise doubt about the Company’s ability to continue as a going concern. Management’
s plans for
additional sources of liquidity include:
(Continued)
(1)
Valuation allowance for deferred income tax assets
(i)
The change in valuation allowance for deferred tax assets was as follows:
Amount
Balance as of January 1, 2009
$
20,060,088
Reduction in 2009
(5,500,330
)
Balance as of December 31, 2009
14,559,758
Increase in 2010
968,034
Balance as of December 31, 2010
$
15,527,792
December 31,
2009
2010
Valuation allowance for deferred tax assets － current
$
(1,121,671
)
(5,021,064
)
Valuation allowance for deferred tax assets － noncurrent
(13,438,087
)
(10,506,728
)
Total
$
(14,559,758
)
(15,527,792
)
(2)
Basis of Presentation and Liquidity
(a)
Use of Formosa Group’s unconditional credit line of $15,500,000.
(b)
Draw down loans for cash to strengthen liquidity. Additional credit facilities in the form of short