8.

INCOME TAXES

Due to the net losses incurred, there was no income tax provision for the years ended December 31, 2017 and 2016. Deferred tax assets and liabilities as of December 31, 2017 and 2016 were as follows:

The Company had available at December 31, 2017, net operating loss carryforwards for federal and state tax purposes of approximately $42,810,000 that could be applied against taxable income in subsequent years through December 31, 2036. The amount of net operating loss carryforward that can offset future taxable income may be limited in accordance with IRC Section 382 following certain ownership changes.

Based on the weight of available evidence, both positive and negative, a valuation allowance to fully provide for the net deferred tax assets has been recorded since it is more likely than not that the deferred tax assets will not be realized.

On December 22, 2017, the Tax Act was signed into law and significantly reformed the Internal Revenue Code of 1986, as amended. The Tax Act will significantly impact the Company by reducing the federal corporate tax rate from 35% to 21%, effective January 1, 2018. As a result of the new federal corporate tax rate, the Company reduced the value of its net deferred tax assets and the related valuation allowance by $4,228,925 during the year ended December 31, 2017. The valuation allowance increased by $1,629,443 during the year ended December 31, 2016.

Reconciliation of the differences between income tax benefit computed at the federal  statutory tax rate of 34% and the provision for income tax benefit for the years ended December 31, 2017 and 2016 was as follows: