The Company has a deferred tax asset as shown in the following:
| 2017 | 2016 | |||||||
| Deferred tax asset: | ||||||||
| Tax loss carryforward | $ | 4,068,832 | $ | 3,833,589 | ||||
| Stock and warrant compensation | 733,673 | 704,167 | ||||||
| Depreciation and amortization | 954,834 | 710,023 | ||||||
| Derivative expense | 492,024 | 518,139 | ||||||
| Other | 461,558 | 461,558 | ||||||
| Valuation allowance | (6,710,921 | ) | (6,227,476 | ) | ||||
| Net deferred tax asset | $ | - | $ | - | ||||
A valuation allowance has been recognized to offset the deferred tax assets because realization of such assets is uncertain.
The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income statutory tax rates to pretax income (loss) from continuing operations as follows:
| 2017 | 2016 | |||||||
| Tax benefit at statutory rates | $ | 483,445 | $ | 3,064,131 | ||||
| Valuation allowance | $ | (483,445 | ) | $ | (3,064,131 | ) | ||
| Net provision for income taxes | $ | - | $ | - | ||||
Reconciliation of the differences between income tax benefit computed at the federal and state statutory tax rates and the provision for income tax benefit for the years ended March 31, 2017 and 2016 is as follows:
| 2017 | 2016 | |||||||
| Income tax expense (benefit) at federal statutory rate | (34.00%) | (34.00%) | ||||||
| State taxes, net of federal benefit | (4.63%) | (4.63%) | ||||||
| Change in valuation allowance | 38.63% | 38.63% | ||||||
The Company has net operating loss carry-forwards of approximately $11,967,000 at March 31, 2017, that expire beginning in 2026. However, utilization of these losses may be limited pursuant to Section 382 of the Internal Revenue Code due to a recapitalization and subsequent stock issuances.