Under ASC No. 740, Income Taxes (“ASC 740”), income taxes are recognized for the following: a) amount of tax payable for the current year and b) deferred tax liabilities and assets for future tax consequences of events that have been recognized differently in the financial statements than for tax purposes.

The Company has non-capital losses of $7,512,930 (2015: $5,080,614) in US non-capital losses, $3,210,343 (2015: $2,043,349) in Canadian non-capital losses, $404,0732 (2015: $401,897) in Irish non-capital losses and $202,920 (2015: $65,163) in Hungarian non-capital losses.

The reconciliation of income taxes at the statutory income tax rates to the income tax expense is as follows:

The components of the temporary differences and the country of origin at December 31, 2016 and 2015 are as follows (applying the combined Canadian federal and provincial statutory income tax rate of 26%, the US income tax rate of 35%, the Irish income tax rate of 12.5%, the Hungarian income tax rate of 10% and the Slovakian income tax rate of 22% for both the years). No deferred tax assets are recognized on these differences as it is not probable that sufficient taxable profit will be available to realize such assets.

Deferred tax asset components as of December 31, 2016 and 2015 are as follows:

As the Company has not earned significant revenues, it has provided a 100 percent valuation allowance on the net deferred tax asset as of December 31, 2016 and 2015. Management believes the Company has no uncertain tax position.

As the Company is delinquent in its historical tax filings it has accrued $90,000 in penalties which the Company estimates it will be assessed on filing of the delinquent returns. The accrued penalties have been recorded as an administrative expense during the year ended December 31, 2016.