NOTE 10 - INCOME TAXES

The Company files corporate income tax returns in the United States (federal), Nevada and Colorado. The Company is subject to federal, state and local income tax examinations by tax authorities through inception.

The Company's tax expense differs from the "expected" tax expense for Federal income tax purposes (computed by applying the United States Federal tax rate of 34% and State tax rate net of federal benefit of 3.01% and 0.00% to income before taxes related to operations in Colorado and Nevada, respectfully), as follows:

The tax effects of temporary differences that give rise to the Company’s net deferred tax assets as of July 31, 2017 and 2016 are as follows:

The Company has approximately $738,000 of net operating losses (“NOL”) carried forward to offset taxable income, if any, in future years which expire commencing in fiscal 2037. In assessing the 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 generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against all deferred tax asset relating to NOLs for every period because it is more likely than not that all of the deferred tax asset will not be realized. The tax returns for 2013 through 2016 remain open for inspection by federal and state taxing authorities.  Utilization of the NOL’s may be limited under IRC certain 382 due to ownership changes.