Net deferred tax assets consist of the following components as of December 31, 2017 and 2016:
| 2017 | 2016 | |||||||
| Deferred tax assets | ||||||||
| NOL carry-forward | $ | 2,537,300 | $ | 1,550,900 | ||||
| Sec 179 carry-forwards | 1,600 | 2,400 | ||||||
| Depreciation | 2,500 | 43,200 | ||||||
| Valuation allowance | (2,541,400 | (1,596,500 | ) | |||||
| Net deferred tax asset | $ | -- | $ | -- | ||||
The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the years ended December 31, 2017 and 2016 due to the following:
| 2017 | 2016 | |||||||
| Book loss | $ | (1,809,400 | ) | $ | (752,200 | ) | ||
| Depreciation | 4,900 | (9,700 | ) | |||||
| Meals and entertainment | 1,100 | 400 | ||||||
| Other non-deductible expenses | 359,300 | 63,800 | ||||||
| Change in valuation allowance | 1,444,100 | 697,700 | ||||||
| $ | - | $ | - | |||||
At December 31, 2017, the Company had net operating loss carry-forwards of approximately $9,759,000 that may be offset against future taxable income from the year 2018 through 2034. No tax benefit has been reported in the December 31, 2017 and 2016, consolidated financial statements since the potential tax benefit is offset by a valuation allowance of the same amount. Additionally, DNA Logix, Inc. is a pass through entity and therefore no provision or liability for federal income tax has been included in the consolidated financial statements for that entity.
Due to change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry-forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry-forwards may be limited as to use in future years.
The Company’s policy on the classification of interest and penalties related to income taxes is to recognize the interest and penalties in the period incurred. There were no penalties or interest incurred for the years ending December 31, 2017 and 2016, related to income taxes.