Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v3.7.0.1
INCOME TAXES
12 Months Ended
Dec. 31, 2016
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 16 – INCOME TAXES


For the years ended December 31, 2016 and 2015 there was no provision for income taxes and deferred tax assets have been entirely offset by valuation allowances.

 

As of December 31, 2016, the Company has net operating loss carry forwards of approximately $7,219,000. The carryforwards expire in years 2033 through 2036. The Company's net operating loss carry forwards may be subject to annual limitations, which could reduce or defer the utilization of the losses as a result of an ownership change as defined in Section 382 of the Internal Revenue Code.


The Company's tax expense differs from the "expected" tax expense for Federal income tax purposes, computed by applying the United States Federal tax rate of 34% to loss before taxes, as follows:


 

The tax effects of the temporary differences between reportable financial statement income (loss) and taxable income (loss) are recognized as deferred tax assets and liabilities.


 

 

Year Ended

 

 

 

December 31,

 

 

 

2016

 

 

2015

 

Tax expense (benefit) at the statutory rate

 

$

(906,797

)

 

$

(568,852

)

State income taxes, net of federal income tax benefit

 

 

(96,813

)

 

 

(60,733

)

Non-deductible expenses

 

 

229,241

 

 

 

2,135

 

Change in valuation allowance

 

 

774,369

 

 

 

627,450

 

Total

 

$

 

 

$

 


The tax effect of significant components of the Company's deferred tax assets and liabilities at December 31, 2016 and 2015, are as follows:


 

 

Year Ended

 

 

 

December 31,

 

 

 

2016

 

 

2015

 

Deferred tax assets:

 

 

 

 

 

 

Net operating loss carryforward

 

$

2,716,420

 

 

$

2,042,006

 

Book to tax difference – intangible assets

 

 

146,733

 

 

 

27,348

 

Stock option expense

 

 

90,801

 

 

 

373,456

 

Total gross deferred tax assets

 

 

2,953,954

 

 

 

2,442,810

 

Less: Deferred tax asset valuation allowance

 

 

(2,953,954

)

 

 

(2,442,810

)

Total net deferred tax assets

 

$

 

 

$

 


In assessing the realizability of 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 ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

 

Because of the historical earnings history of the Company, the net deferred tax assets for 2016 and 2015 were fully offset by a 100% valuation allowance.  The change in the valuation allowance was an increase of $774,369 and $627,450 for the years December 31, 2016 and 2015, respectively.