Entity information:

NOTE 15 - INCOME TAXES

 

In 2016 and 2015, we recorded net tax provisions of nil.

 

The components of the provision for income taxes, net for the fiscal years ended December 31, 2016 and 2015 are:

 

      2016       2015  
Current taxes:                
U.S. Federal   $ -     $ -  
U.S. State     -       -  
International     -       -  
Current taxes     -       -  
Deferred taxes:                
U.S. Federal     -       -  
U.S. State     -       -  
International     -       -  
Deferred taxes     -       -  
Provision for income taxes, net   $ -     $ -  

 

Differences between income taxes computed at the federal statutory rate and the provision recorded for income taxes are comprised of the follow items:

 

    2016     2015  
Income taxes computed at the federal statutory rate   $ (1,021,000 )   $ (1,801,000 )
Effect of:                
State taxes, net of federal benefits     (92,000 )     (162,000 )
Loss of net operating losses from discontinued operations             -  
Loss of net operating losses due to 382 limitations             596,000  
Nondeductible expenses     717,000       501,000  
Other, net     122,000       114,000  
Change in valuation allowance     274,000       752,000  
Total   $ -     $ -  

 

As of December 31, 2016, the Company has approximately $ in net operating losses carried forward for federal and state income tax purposes, which will expire, if not utilized, in 2035.

 

As a result of the Safari acquisition (see Note 1), there was a change of control (greater than 50% ownership change) and a change in lines of business, thus utilization of prior year net operations losses will be limited.

 

Deferred income tax assets as of December 31, 2016 and 2015 are as follows:

 

    2016     2015  
Deferred tax assets:                
Net operating losses   $ 3,762,000     $ 2,155,000  
Consultant Expenses     -       7,000  
Other items     19,000       12,000  
Total deferred tax assets     3,781,000       2,052,000  
Deferred tax liabilities                
Federal utilization of state benefits     (154,000 )     (82,000 )
Fixed asset basis difference     (14,000 )     (41,000 )
Consulting expense     (25,000 )        
Total deferred tax liabilities     (193,000 )     (115,000 )
Net deferred tax assets before valuation allowance     3,588,000          
Less valuation allowance     (3,588,000 )     (2,052,000 )
Net Deferred tax assets   $ -     $ -  

 

We are under examination, or may be subject to examination, by the Internal Revenue Service (“IRS”) for the calendar year 2009 and thereafter. These examinations may lead to ordinary course adjustments or proposed adjustments to our taxes or our net operating losses with respect to years under examination as well as subsequent periods. We have filed our past years’ federal corporate income tax returns from 2009 through 2015and may be subject to penalties, as described below, for non-compliance; however, we believe that we had no taxable income in US or in any foreign jurisdiction. We are in process of completing our US federal tax return for 2016 and state tax returns for years 2009 through 2016.

 

The Company also has net operating loss carryforwards of approximately $9,737,098 included in the deferred tax asset table above for 2016 and 2015, respectively, However, due to limitations of carryover attributes , it is unlikely the company will benefit from these NOL’s and thus Management has determined a 100% valuation reserved is required. .

 

For U.S. purposes, the Company has not completed its evaluation of NOL utilization limitations under Internal Revenue Code, as amended (the “Code”) Section 382, change of ownership rules. If the Company has had a change in ownership, the NOL’s would be limited as to the amount that could be utilized each year, based on the Code.

 

The Company has been penalized by the Internal Revenue Service for failure to file its Foreign Form 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations for the years 2009 through 2014 on a timely basis . The Penalties are approximate $120,000. The Company has requested the penalties be abated to the Internal Revenue Service and believes the Penalties will be abated for reasonable cause, but no assurance can be relied upon until the Internal Revenue Service acts upon the request.