NOTE 8 - INCOME TAXES
The Company maintains deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The net deferred tax asset has been fully offset by a valuation allowance because of the uncertainty of the attainment of future taxable income. The Company did not have an income tax provision or benefit for the year ended September 30, 2017 or 2016. The Company has incurred losses and therefore has provided a full valuation allowance against net deferred tax assets as of September 30, 2017 and 2016.
The items accounting for the difference between income taxes at the effective statutory rate and the provision for income taxes for the year ended September 30, 2017 and 2016 were as follows:
| September 30, 2017 | September 30, 2016 | |||||||
| Income tax benefit at U.S. statutory rate of 35% | $ | (1,768,142 | ) | $ | (49,862 | ) | ||
| State income tax, net of federal benefit | (176,814 | ) | (4,986 | ) | ||||
| Non-deductible expenses | 1,840,280 | — | ||||||
| Change in valuation allowance | 104,676 | 54,848 | ||||||
| Total provision for income tax | $ | — | $ | — | ||||
The Company’s approximate net deferred tax assets as of September 30, 2017 and 2016 were as follows:
| September 30, 2017 | September 30, 2016 | |||||||
| Deferred Tax Assets: | ||||||||
| Net operating loss carryforward | $ | 104,676 | $ | 107,822 | ||||
| Intangibles | 30,032 | — | ||||||
| Total deferred tax assets | 212,498 | 107,822 | ||||||
| Valuation allowance | (212,498 | ) | (107,822 | ) | ||||
| Net deferred tax asset | $ | — | $ | — | ||||
At September 30, 2017, the Company had U.S. net operating loss carryforwards of $473,937 for income tax purposes, which expire in varying amounts through 2037. The amount of any benefit from the Company’s U.S. tax net operating losses is dependent on: (1) its ability to generate future taxable income, and (2) the unexpired amount of net operating loss carryforwards available to offset amounts payable on such taxable income. Any change in ownership greater than fifty percent under IRC section 382 places significant annual limitations on the use of the Company’s U.S. net operating losses to offset any future taxable U.S. income that may be generated.
The valuation allowance increased by $104,676 and $54,848 for the periods ended September 30, 2017 and 2016, respectively.