In December, 2014, the Company underwent a change in control which subjected it to limitations under Internal Revenue Code Section 382. That section restricts post-change annual net operating loss (NOL) utilization, based on applying an IRS- prescribed rate to the purchase price of the stock acquired in the change in control. The Company accordingly revised its estimates of NOL carry forwards, resulting in a reduction in the estimate of losses available for utilization in the amount of approximately $872,000.

A reconciliation of income tax benefit to the amount computed at the statutory rate of 34% (2016 – 34%) is as follows:

Significant components of deferred income tax assets are as follows:

The Company has approximately $961,000 (2016: $712,000) in NOLs carried forward which will expire by 2037 if not utilized. Future tax benefits, which may arise as a result of these losses, have not been recognized in these financial statements, and have been offset by a valuation allowance.

Amendments to the Internal Revenue Code of 1986 that were signed into law on December 22, 2017 reduce the corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017. For NOLs arising after December 31, 2017, the amendments limit a taxpayer’s ability to utilize NOL carryforwards to 80% of taxable income. In addition, NOLs arising after 2017 can be carried forward indefinitely, but carryback is generally prohibited. NOLs generated in tax years beginning before January 1, 2018 will not be subject to the taxable income limitation. The amendments generally eliminate the carryback of all NOLs arising in a tax year ending after 2017 and instead permit all such NOLs to be carried forward indefinitely. The Company’s NOLs to December 31, 2017, carried forward for United States income tax purposes, will expire, if not utilized, as follows:

Realization of the above losses carried forward is dependent on the Company filing the applicable tax returns with the tax authorities, generating sufficient taxable income prior to expiration of the losses carried forward and continuing use of the acquired historic business or a significant portion of the acquired assets for two years after the change of control transaction. If this continuity of business enterprise requirement is not met, the annual net operating loss limitation on pre-change losses is zero. The two year continuing use component of the requirement has been met.