7. INCOME TAXES

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

INCOME TAXES

7.       INCOME TAXES

The income tax provision on the statements of income consists of $0 and $6,000 for the years ended December 31, 2018 and 2017, respectively. Income tax provision comprised of the following at December 31:

	2018		2017
Current income taxes	$	–	$	6,000
Deferred income tax benefit		–		–
Income tax provision	$	–	$	6,000

Deferred tax assets are comprised of the following at December 31:

	2018			2017
Net operating loss carryforward	$	177,000		$	1,928,000
Tax credits		121,000			132,000
Temporary differences		(298,000	)		52,000
Less valuation allowance		–			(2,112,000	)
Deferred tax asset, net	$	–		$	–

Deferred taxes arise from temporary differences in the recognition of certain expenses for tax and financial reporting purposes. At December 31, 2018, management determined that realization of these benefits are realizable and does not believe a valuation allowance is needed. At December 31, 2018 and 2017, net operating loss carryforwards were approximately $843,000 and $4,341,000, respectively. During the year ended December 31, 2018, the Company had utilized $3,498,000 net operating loss carryforward.

For December 31, 2018 and 2017, the provision for income taxes differs from the amount computed by applying the U.S. federal statutory tax rate (21% in 2018 and 34% in 2017) to income taxes as follows:

	2018			2017
Tax provision computed at 21% and 34%, respectively	$	542,000		$	609,000
Change in valuation allowance		(794,000	)		308,000
Change in carryovers and tax attributes		252,000			(911,000	)
Income tax provision	$	–		$	6,000