| 13. | Income Taxes |
| The potential benefit of net operating losses have not been recognized in the consolidated financial statements because the Company cannot be assured that it is more likely than not that it will utilize the net operating losses carried forward in future years. The Company did not incur any income tax expense for the years ended May 31, 2017 and 2016. At May 31, 2017, approximately $2.5 million of federal and state net operating losses were available to the Company to offset future taxable income, which will expire commencing in 2032. Given the short history of the Company and the uncertainty as to the likelihood of future taxable income, the Company has recorded a 100% valuation reserve against the anticipated recovery from the use of the net operating losses created at the inception or generated thereafter. The Company will evaluate the appropriateness of the valuation allowance on an annual basis and adjust the allowance as considered necessary. | |
| The items accounting for the difference between income taxes computed at the statutory rate and the provision for income taxes consist of the following: |
| Year Ended May 31, 2017 |
Year Ended May 31, 2016 |
|||||||
| Computed income tax benefit at statutory tax rate | 35 | % | 35 | % | ||||
| Changes in allowance on deferred tax assets | (35 | )% | (35 | )% | ||||
| Total income tax expense | - | - | ||||||