This excerpt taken from the VM 8-K filed Nov 7, 2008.
The vast majority of the Companys operating results and losses since its inception through December 31, 2007 are included in the operating results of HELIO LLC, the operating company. HELIO LLC is not a taxable entity for federal or state income tax purposes. Rather, these taxes are included in each Partners federal and state income tax returns. To the extent that certain states impose income taxes upon non-corporate legal entities, the Company generally records a provision (benefit) for these state income taxes and recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities, applying enacted statutory rates. Pursuant to the provisions of SFAS No. 109, Accounting For Income Taxes, the Company generally provides valuation allowances for deferred tax assets for which it does not consider realization of such assets to be more likely than not. See Note 13 for further information.
HELIO, INC. and HELIO LLC
NOTES TO COMBINED FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies (continued)