The significant components of the Company’s deferred tax assets are as follows:
March 31, 2017 |
March 31, 2016 |
|||||||
| Deferred tax assets | ||||||||
| Net operating loss carryforwards | $ | 18,640,688 | $ | 15,261,391 | ||||
| Less: Valuation allowance for deferred tax asset | (18,640,688 | ) | (15,261,391 | ) | ||||
| $ | - | $ | - | |||||
Reconciliation between the provision for income taxes and the expected tax benefit using the federal statutory rate of 34% and state statutory rate of 6.9% for 2017 and 2016 is as follows:
March 31, 2017 |
March 31, 2016 |
|||||||
| Income tax benefit at federal statutory rate | (34.00 | )% | (34.00 | )% | ||||
| State income tax benefit, net of effect on federal taxes | (6.90 | )% | (6.90 | )% | ||||
| Increase in valuation allowance | 40.90 | % | 40.90 | % | ||||
| Income tax expense (benefit) | 0.0 | % | 0.0 | % | ||||
The amount taken into income as deferred tax assets must reflect that portion of the net operating loss carryforwards that is more likely-than-not to be realized from future operations. The Company has chosen to provide an allowance of 100% against all available income tax loss carryforwards, due to the uncertainty surrounding their realization.
No provision for income taxes has been provided in these consolidated financial statements due to the net loss. The effective tax rate differs from the 34% statutory rate for the year ended March 31, 2017 due to the change in valuation allowance.
Due to the change in ownership provisions of the Income Tax laws of United States of America, net operating loss carry forwards of approximately $18,640,688 for federal income tax reporting purposes are subject to annual limitations. When a change in ownership occurs, net operating loss carry forwards may be limited as to use in future years. They typically expire 20 years from when incurred.