NOTE 10 - INCOME TAXES
As of May 31, 2017, the Company had net operating loss carryforwards of approximately $4,000,000 available to reduce future years’ taxable income through 2037. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carryforwards.
The components of the deferred tax asset, the statutory tax rate, the effective tax rate and the elected amount of the valuation allowance are indicated below:
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| For the Year Ended May 31, 2017 |
| For the Year Ended May 31, 2016 | ||
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| Net loss | $ | 2,065,691 |
| $ | 801,599 |
| Statutory tax rate |
| 34% |
|
| 34% |
| Refundable federal income tax attributable to current operations |
| 702,000 |
|
| 273,000 |
| Non-deductible stock-based compensation |
| (369,000) |
|
| -- |
| Change in valuation allowance |
| (333,000) |
|
| (273,000) |
| Net refundable amount | $ | -- |
| $ | -- |
The cumulative tax effect at the expected rate of 34% of significant items comprising the net deferred tax amount is:
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| May 31, 2017 |
| May 31, 2016 | ||
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| Deferred tax asset attributed to: |
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|
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| Net operating losses | $ | 1,327,000 |
| $ | 994,000 |
| Less, valuation allowance |
| (1,327,000) |
|
| (994,000) |
| Net deferred tax assets | $ | -- |
| $ | -- |
The Company has provided a valuation allowance against its deferred tax assets given that there is substantial uncertainty as the Company’s ability to realize future tax benefits through utilization of operating loss carryforwards.