NOTE 11 – INCOME TAXES

At December 31, 2016 and 2015, the Company had approximately $5.5 million and $4.0 million, respectively, of net operating losses ("NOL") carry forwards for federal and state income tax purposes.  These losses are available for future years and expire through 2034.  Utilization of these losses may be severely or completely limited if the Company undergoes an ownership change pursuant to Internal Revenue Code Section 382.  

The provision for income taxes for continuing operations consists of the following components for the years ended December 31, 2016 and 2015:

A comparison of the provision for income tax expense at the federal statutory rate of 34% for the years ended December 31, 2015 and 2014 the Company's effective rate is as follows:

The net deferred tax assets and liabilities included in the financial statements consist of the following amounts at December 31, 2016 and December 31, 2015:

The change in the valuation allowance was $1,935,510 and $4,028,702 for the years ended December 31, 2016 and 2015, respectively.  The Company has recorded a 100% valuation allowance related to the deferred tax asset for the loss from operations, interest expense, interest income and other income subsequent to the change in ownership, which amounted to $14,393,641 and $12,458,131 at December 31, 2016 and 2015, respectively. 

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, historical taxable income including available net operating loss carry forwards to offset taxable income, and projected future taxable income in making this assessment.