At December 31, 2016, the Company had federal and state net operating loss carry forwards of approximately $45,500,000 that expire in various years through the year 2036.
Due to operating losses, there is no provision for current federal or state income taxes for the years ended December 31, 2016 and 2015.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for federal and state income tax purposes.
The Company’s deferred tax asset at December 31, 2016 and 2015 consists of net operating loss carry forwards calculated using federal and state effective tax rates equating to approximately $17,745,000 and $16,770,000, respectively, less a valuation allowance in the amount of approximately $17,745,000 and $16,770,000, respectively. Because of the Company’s lack of earnings history, the deferred tax asset has been fully offset by a valuation allowance in both 2016 and 2015. The valuation allowance increased by approximately $975,000 for the year ended December 31, 2016.
The Company’s total deferred tax asset as of December 31, 2016 and 2015 is as follows:
| 2016 | 2015 | |||||||
| Deferred tax assets | $ | 17,745,000 | $ | 16,770,000 | ||||
| Valuation allowance | (17,745,000 | ) | (16,770,000 | ) | ||||
| Net deferred tax asset | $ | – | $ | – | ||||
The reconciliation of income taxes computed at the federal and state statutory income tax rate to total income taxes for the years ended December 31, 2016 and 2015 is as follows:
| 2016 | 2015 | |||||||
| Income tax computed at the federal statutory rate | 34% | 34% | ||||||
| Income tax computed at the state statutory rate | 5% | 5% | ||||||
| Valuation allowance | (39% | ) | (39% | ) | ||||
| Total deferred tax asset | 0% | 0% | ||||||