The income tax expense (benefit) differs from the amount computed by applying the United States Statutory corporate income tax rate as follows:

Deferred income taxes reflect the tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. The components of the net deferred income tax assets are approximately as follows:

Deferred income tax assets:

The Company has established a full valuation allowance on its deferred tax asset because of a lack of sufficient positive evidence to support its realization. The valuation allowance increased by $6,285,080 and $3,726,200 for the years ended December 31, 2016 and 2015, respectively.

As of December 31, 2016, the Company has net operating loss carry forwards of approximately $25,552,000 in the United States, which expire commencing 2033. The potential tax benefit of these losses may be limited due to certain change in ownership provisions under Section 382 of the Internal Revenue Code (“IRS”) and similar state provisions. The Company also has a net operating loss carry forward in Canada of approximately $5,869,000 (CAD 7,773,000) which expire commencing 2034 as well as in Luxembourg of $358,000 (EUR 306,000) which expires in 2033.

IRS Section 382 places limitations (the “Section 382 Limitation”) on the amount of taxable income which can be offset by net operating loss carry forwards after a change in control (generally greater than 50% change in ownership) of a loss corporation. Generally, after a change in control, a loss corporation cannot deduct operating loss carry forwards in excess of the Section 382 Limitation. Due to these “change in ownership” provisions, utilization of the net operating loss and tax credit carry forwards may be subject to an annual limitation regarding their utilization against taxable income in future periods. The Company has not concluded its analysis of Section 382 through December 31, 2016, but believes the provisions will not limit the availability of losses to offset future income.

The Company is subject to income taxes in the U.S., Canada and Luxembourg. The tax regulations within each jurisdiction are subject to interpretation of related tax laws and regulations and require significant judgment to apply. No provision was made for income taxes for the years ended December 31, 2016 and 2015 as the Company had cumulative operating losses in each of these jurisdictions.