Note 4 — Income Taxes

As a result of the Tax Cuts and Jobs Act of 2017 (the “TCJA”), the Company has revalued its deferred tax assets based on the new federal tax rate of 21%.

The Company’s net deferred tax assets are as follows as of December 31, 2017 and December 31, 2016, respectively:

The Company has net operating losses of approximately $1,228,000 that expire through 2037. The ultimate realization of the related deferred tax asset is dependent upon future taxable income, if any, of the Company. Management does not believe that the Company will have sufficient future taxable income to absorb the net operating loss carryovers. Accordingly, management has determined that a full valuation allowance of the deferred tax asset is appropriate at December 31, 2017 and 2016.

Internal Revenue Code Section 382 imposes limitations on the use of net operating loss carryovers when the stock ownership of one or more 5% stockholders (stockholders owning 5% or more of the Company’s outstanding capital stock) has increased on a cumulative basis by more than 50 percentage points within a period of two years. Management cannot control the ownership changes occurring as a result of public trading of the Company’s common stock. Accordingly, there is a risk of an ownership change beyond the control of the Company that could trigger a limitation of the use of the loss carryovers.

A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the years ended December 31, 2017 and December 31, 2016 is as follows: