NOTE 7 - INCOME TAXES

Deferred tax assets of the Company are as follows:

Permanent differences resulting from the net amount of applying the statutory federal income tax rate of 34% to the loss from discontinued operations of $928,319.

A valuation allowance has been recorded to reduce the net benefit recorded in the financial statements related to these deferred tax assets. The valuation allowance is deemed necessary as a result of the uncertainty associated with the ultimate realization of these deferred tax assets.

The provision for income tax differs from the amount computed by applying statutory federal income tax rate of 34% (2015 – 34%) to the net loss for the year.  The sources and effects of the tax differences are as follows:

At May 31, 2016, the Company had net operating loss carry forwards of approximately $507,000 (2015 - $392,000) that may be offset against future taxable income through 2032.  No tax benefit has been reported in the May 31, 2016financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.