Deferred Tax Assets

At August 31, 2017, the Company had net operating loss (“NOL”) carry–forwards for Federal income tax purposes of $635,785 that may be offset against future taxable income through 2036. No tax benefit has been recorded with respect to these net operating loss carry-forwards in the accompanying financial statements as the management of the Company believes that the realization of the Company’s net deferred tax assets of approximately $216,200 was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by the full valuation allowance.

Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realization. The valuation allowance decreased by $31,281 and $100,516 for the years ended August 31, 2017 and 2016, respectively.

Components of deferred tax assets are as follows:

Income Tax Provision in the Statements of Operations

A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of loss before income taxes is as follows:

The Company's income tax filings are subject to audit by various taxing authorities. The Company's open audit periods are August 30, 2015 to the current year.