NOTE 12 – INCOME TAXES
At September 30, 2017, the Company had net operating loss (“NOL”) carryforwards for federal income tax purposes of approximately $15 million that may be offset against future taxable income through 2037. No tax benefit has been reported with respect to these net operating loss carryforwards because the Company believes that the realization of the Company’s net deferred tax assets of approximately $5,000,000 was not considered more likely than not and accordingly, the potential tax benefits of the net loss carryforwards are offset by a full valuation allowance.
Deferred tax assets consist primarily of the tax effect of NOL carryforwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding the probability of its realization.
The Company’s effective income tax rate differs from the amount computed by applying the federal statutory income tax rate to loss before income taxes as follows:
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| September 30, 2017 | September 30, 2016 | |
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| Income tax benefit at federal statutory rate |
| (34.00%) | (34.00%) | |
| State income tax benefit, net of federal benefit | (6.00%) | (6.00%) | ||
| Change in valuation allowance |
| 40.00% | 40.00% | |
| Income taxes at effective income tax rate |
| -% | -% |
The components of deferred taxes consist of the following at September 30, 2017 and 2016:
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| September 30, 2017 | September 30, 2016 | |
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| Net operating loss carryforwards | $ | 5,535,673 | $ | 4,919,273 |
| Impairment of goodwill and intangible assets | - | 139,856 | ||
| Less: Valuation allowance | (5,535,673) | (5,059,129) | ||
| Net deferred tax assets | $ | - | $ | - |