As of December 31, 2017 and 2016, significant components of the Company’s deferred tax assets were as follows:

 

		December 31,
		2017			2016
Net operating loss carryforwards		$	1,551,000		$	3,356,000
Stock-based compensation			504,000			2,016,000
Deferred rent			-			9,000
Accrued compensation			17,000			-
Depreciation			5,000			1,000
Total deferred tax assets			2,077,000			5,382,000
Valuation allowance			(2,077,000)			(5,382,000)
Net deferred tax assets		$	-		$	-

 

In assessing the potential realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the Company attaining future taxable income during the periods in which those temporary differences become deductible. As of December 31, 2017, management was unable to determine if it is more likely than not that the Company’s deferred tax assets will be realized and has therefore recorded an appropriate valuation allowance against deferred tax assets at such dates.

 

No federal tax provision has been provided for the years ended December 31, 2017 and 2016, due to the losses incurred during the periods. Reconciled below is the difference between the income tax rate computed by applying the U.S. federal statutory rate and the effective tax rates for the years ended December 31, 2017 and 2016:

 

		Year Ended December 31,
		2017			2016
U. S. federal statutory tax rate			(35.0)	%		(35.0)	%
Share-based compensation			4.3	%		0.0	%
State taxes, net of Federal benefit			0.0	%		(6.0)	%
Adjustment to beginning deferred tax asset			68.5	%		0.0	%
Change in valuation allowance			(38.0)	%		41.0	%
Other			0.2	%		0.0	%
Effective tax rate			0.0	%		0.0	%