8. Income Taxes - Results of Operations
There was no income tax expense reflected in the results of operations for the years ended December 31, 2016 and 2015 because the Company incurred a net loss in both years.
Deferred tax assets:
| 2016 | 2015 | ||||||
| Net operating losses | $ | 27,153,000 | $ | 22,611,000 | |||
| Stock based compensation | 63,108,000 | 60,914,000 | |||||
| Amortization, depreciation, and impairment | 6,765,000 | 6,765,000 | |||||
| Capitalization of start-up costs for tax purposes | 1,854,000 | 1,854,000 | |||||
| Loss on debt conversion of debt | 1,216,000 | 502,000 | |||||
| Total deferred tax assets | 99,382,000 | 92,646,000 | |||||
| Valuation allowance | (99,382,000 | ) | (92,646,000 | ) | |||
| Total deferred tax assets, net | $ | - | $ | - | |||
The Company has recognized no tax benefit for the losses generated for the periods through December 31, 2016. ASC Topic 740 requires that a valuation allowance be provided if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company’s ability to realize the benefit of its deferred tax asset will depend on the generation of future taxable income. Because the Company has yet to recognize revenue, we believe that the full valuation allowance should be provided.
Our effective tax rate for fiscal years 2016 and 2015 was 0%. Our tax rate can be affected by recurring items, such as tax rates in foreign jurisdictions and the relative amount of income we earn in jurisdictions. It may also be affected by discrete items that may occur in any given year, but are not consistent from year to year.
As of December 31, 2016, we have estimated federal and state income tax net operating loss (“NOL”) carry-forwards of approximately $79,900,000, which will expire in 2032-2035.
| 2016 | 2015 | |||||||||||||||
| Amount | Percent | Amount | Percent | |||||||||||||
| Benefits for income tax at federal statutory rate | $ | 6,738,000 | 34 | % | $ | 5,763,000 | 34 | % | ||||||||
| Change in valuation allowance | (6,983,000 | ) | (34 | )% | $ | (5,762,000 | ) | (34 | ) | |||||||
| Permanent differences | (2,000 | ) | - | (1,000 | ) | - | ||||||||||
| Change in estimates | 247,000 | - | - | - | ||||||||||||
| $ | - | - | $ | - | - | % | ||||||||||