10. INCOME TAXES

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

INCOME TAXES

The Company accounts for income taxes in accordance with ASC Topic No. 740, “Income Taxes.” This standard requires the Company to provide a net deferred tax asset or liability equal to the expected future tax benefit or expense of temporary reporting differences between book and tax accounting and any available operating loss or tax credit carry forwards.

A 100% valuation allowance has been provided for all deferred tax assets, as the ability of the Company to generate sufficient taxable income in the future is uncertain.

The unexpired net operating loss carry forward at December 31, 2017 is approximately $34,740,000 with various expiration dates between 2019 and 2037 if not utilized. All tax years starting with 2014 are open for examination.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) significantly revised U.S. corporate income tax law by, among other things, reducing the corporate income tax rate from 34% to 21%. As a result of this effective tax rate change the Net operating loss carry forward as of December 31, 2017, decreased from $11,928,740 to $7,295,315, a decrease of $4,633,425. Because the Company recognizes a valuation allowance for the entire balance, there is no net impact to the Company’s balance sheet or results of operations.

Non-current deferred tax asset:

	2017			2016
Net operating loss carry forwards, (21% as of December 31, 2017 and 34% as of December 31, 2016	$	7,295,315		$	11,781,690
Valuation allowance		(7,295,315	)		(11,781,690	)
Net non-current deferred tax asset	$	-		$	-

Reconciliations of the expected federal income tax benefit based on the statutory income tax rate of 34% to the actual benefit for the years ended December 31, 2017 and 2016 are listed below.

	2017			2016
Expected federal income tax benefit	$	(112,645	)	$	141,354
Goodwill amortization		142,386			142,386
Gain on settlement of debt		114,757			-
NOL carryover reduced by settlement of debt		(114,403	)		-
Change in valuation allowance		(11,807	)		(5,369	)
Expired capital loss carryover		(9,227	)		-
Other		(9,061	)		(1,720	)
Derivative gain		-			90
Stock-based compensation		-			(276,741	)
Income tax expense (benefit)	$	0		$	0

The Company has no tax positions at December 31, 2017 and 2016 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. During the years ended December 31, 2017 and 2016, the Company recognized no interest and penalties.