NOTE 9. INCOME TAX

The Company’s net deferred tax assets are as follows:

	December 31, 2015		December 31, 2014
Deferred tax asset
Net operating loss carryforward	$	1,663,937	$	64,448
Unrealized loss on securities		4,678		—
Total deferred tax assets		1,668,615		64,448
Valuation allowance		(1,668,615)		(64,448)
Deferred tax asset, net of allowance	$	—	$	—

The income tax provision (benefit) consists of the following:

	Year Ended December 31, 2015		For the Period from May 30, 2014 (inception) through December 31, 2014
Federal
Current	$	—	$	—
Deferred		(1,198,757)		(48,120)

State and Local
Current		—		—
Deferred		(405,460)		(16,328)
Change in valuation allowance		1,604,217		64,448
Income tax provision (benefit)	$	—	$	—

As of December 31, 2015, the Company had U.S. federal and state net operating loss carryovers (“NOLs”) of $3,657,005 available to offset future taxable income. These NOLs expire beginning in 2034. In accordance with Section 382 of the Internal Revenue Code, deductibility of the Company’s NOLs may be subject to an annual limitation in the event of a change in control as defined under the regulations.

In assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the year ended December 31, 2015, the change in the valuation allowance was $1,604,217.

A reconciliation of the federal income tax rate to the Company’s effective tax rate is as follows:

	Year Ended December 31, 2015			For the Period from May 30, 2014 (inception) through December 31, 2014
Statutory federal income tax rate		(34.0)	%		(34.0)	%
State taxes, net of federal tax benefit		(11.5)	%		(11.5)	%
Change in valuation allowance		45.5	%		45.5	%
Income tax provision (benefit)		0.0	%		0.0	%