The Company uses the liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes. During fiscal 2016 and 2015, the Company incurred a net loss and therefore has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward was approximately $2,774,000 and $2,634,000 at December 31, 2016 and 2015, respectively, and will begin to expire in the year 2025.

At December 31, 2016 and 2015, deferred tax assets at the statutory rate consisted of the following: