Note 8 – Income Taxes
The Company’s provision for (benefit from) income taxes is summarized below for the years ended December 31:
| 2016 | 2015 | |||||||
| Current: | ||||||||
| Federal | $ | — | $ | — | ||||
| State | — | — | ||||||
| — | — | |||||||
| Deferred: | ||||||||
| Federal | (375,457 | ) | (755,350 | ) | ||||
| State | (119,193 | ) | (239,794 | ) | ||||
| (494,650 | ) | (995,144 | ) | |||||
| Total income taxes | (494,650 | ) | (995,144 | ) | ||||
| Less: valuation allowance | 494,650 | 995,144 | ||||||
| Net income taxes | $ | — | $ | — | ||||
The reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows for the years ended December 31:
2015 |
2014 | |||||||
| Federal statutory rate | 35.0 | % | 35.0 | % | ||||
| State income taxes (net of federal benefit) | 6.5 | 6.5 | ||||||
| Valuation allowance | (41.5 | ) | (41.5 | ) | ||||
| Effective rate | 0.0 | % | 0.0 | % | ||||
Significant components of the Company’s deferred tax assets and liabilities are summarized below. A valuation allowance has been established as realization of such assets has not met the more-likely-than-not threshold requirement under FASB ASC 740.
| December 31, 2016 | December 31, 2015 | |||||||
| Start-up costs | $ | 27,658 | $ | 37,491 | ||||
| Depreciation | (37,079 | ) | (37,759 | ) | ||||
| Accrued expenses | 182,629 | 687,212 | ||||||
| Net operating loss carryforward | 16,677,809 | 15,669,422 | ||||||
| Deferred income taxes | 16,851,017 | 16,356,366 | ||||||
| Less: valuation allowance | (16,851,017 | ) | (16,356,366 | ) | ||||
| Net deferred income taxes | $ | — | $ | — | ||||
At December 31, 2016, the Company had federal and state net operating loss carryforwards of approximately $38,820,000. The federal and state net operating loss carryforwards will expire beginning in 2021 and 2026, respectively. The amount of the state net operating loss carryforward that can be utilized each year to offset taxable income is limited by state law.