Note 12 – Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. At December 31, 2016, the Company has a Net Operating Loss (“NOL”) carryforward of approximately $2,800,000. The NOL expires during the years 2034 to 2036. In the event that a significant change in ownership of the Company occurs as a result of the Company’s issuance of common stock, the utilization of the NOL carryforward will be subject to limitation under certain provisions of the Internal Revenue Code. Management does not presently believe that such a change has occurred. Realization of any portion of the $1,414,030 of net deferred tax assets at December 31, 2016 is not considered more likely than not by management; accordingly, a valuation allowance has been established for the full amount. The valuation allowance as of December 31, 2016 was $1,414,030. The change in the valuation allowance during the year ended December 31, 2016 amounted to $977,137.

Significant components of the Company’s deferred tax assets are as follows:

Reconciliation of the differences between income tax benefit computed at the federal and state statutory tax rates and the provision for income tax benefit for the years ended December 31, 2016 and 2014 is as follows: