Note 14 – Income Taxes
The Company had net operating loss carryforwards (“NOLs”) as of December 31, 2016 of approximately $1,397,000 for federal and state tax purposes, portions of which are expiring at various years through 2034. The Company may be able to utilize its NOLs to reduce future federal and state income tax liabilities. However, these NOLs are subject to various limitations under Internal Revenue Code (“IRC”) Section 382. IRC Section 382 limits the use of NOLs to the extent there has been an ownership change of more than 50 percentage points. In addition, the NOL carryforwards are subject to examination by the taxing authority and could be adjusted or disallowed due to such exams. Although the Company has not undergone an IRC Section 382 analysis, it is possible that the utilization of the NOLs could be significantly limited.
Components of net deferred tax assets (liabilities), including a valuation allowance, are as follows at December 31:
| Years Ended December 31, | ||||||||
| 2016 | 2015 | |||||||
| Deferred tax assets: | ||||||||
| Deferred revenue | $ | 42,500 | $ | 32,000 | ||||
| Net operating loss carryforwards | 559,000 | 259,000 | ||||||
| Total deferred tax assets | $ | 601,500 | $ | 291,000 | ||||
| Deferred tax liabilities: | ||||||||
| Depreciation | - | - | ||||||
| Total deferred tax liabilities | - | - | ||||||
| Net deferred tax assets before valuation allowance | $ | 601,500 | $ | 291,000 | ||||
| Valuation allowance | (601,500 | ) | (291,000 | ) | ||||
| Net deferred tax assets | $ | - | $ | - | ||||