| 6. | Income Taxes |
Deferred taxes are recorded for all existing temporary differences in the Company’s assets and liabilities for income tax and financial reporting purposes. Due to the valuation allowance for deferred tax assets, as noted below, there were no net deferred tax benefit or expense for the year ended June 30, 2017.
There is no current or deferred income tax expense or benefit allocated to continuing operations for the year ended June 30, 2017.
The provision for income taxes is different from that which would be obtained by applying the statutory federal income tax rate to income before income taxes. The items causing this difference are as follows:
| June 30, 2017 | June 30, 2016 | |||||||
| Tax expense (benefit) at U.S. statutory rate | $ | (528,229 | ) | $ | (146,889 | ) | ||
| State income tax expense (benefit), net of federal benefit | (42,074 | ) | (21,659 | ) | ||||
| Effect of non-deductible expenses | ||||||||
| Other | ||||||||
| Change in valuation allowance | 570,303 | 168,548 | ||||||
| $ | — | $ | — | |||||
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at June 30, 2017 are as follows:
| Deferred tax assets (liability), noncurrent: | ||||
| Net operating loss | $ | 570,303 | ||
| Valuation allowance | (570,303 | ) | ||
| $ | — | |||
Change in valuation allowance:
| Balance, June 30, 2016 | $ | 391,848 | ||
| Increase in valuation allowance | 570,303 | |||
| Balance, June 30, 2017 | 962,151 |
Since management of the Company believes that it is more likely than not that the net deferred tax assets will not provide future benefit, the Company has established a 100 percent valuation allowance on the net deferred tax assets as of June 30, 2017.
As of June 30, 2017, the Company had federal and state net operating loss carry-forwards totaling approximately $2,335,009 which begin expiring in 2022.