5 . Income Taxes

The provision (benefit) for income taxes consisted of the following:

	Year Ended August 31,
	2014		2013
Current tax (benefit) expense:
Federal	$	–	$	–
State		–		–
Total current		–		–

Deferred tax (benefit) expense:
Federal		–		–
State		–		–
Total deferred		–		–
Total income tax expense	$	–	$	–

The Company in fiscal years 2014 and 2013 continued to have operating losses. The Company believes that the likelihood of realizing future tax benefit for the deferred tax assets is low, and hence increased the valuation allowance to write-off the deferred tax assets.

Significant components of the Company's deferred tax liabilities and assets were as follows at August 31, 2014:

	Current		Noncurrent
Deferred tax liabilities:
Depreciation	$	–	$	(210,814)
Deferred tax assets:
Net operating loss carryforward		–		8,610,673
Revenue and expense differences		(350,000)		5,197,056
Allowance for uncollectible accounts		513,456		–
Other		(163,456)		(28,175)
Valuation allowance		–		(13,568,740)
Net deferred tax asset (liability)	$	–	$	–

Significant components of the Company's deferred tax liabilities and assets were as follows at August 31, 2013:

	Current		Noncurrent
Deferred tax liabilities:
Depreciation	$	–	$	(207,396)
Deferred tax assets:
Net operating loss carryforward		–		9,439,548
Revenue and expense differences		13,157		3,580,862
Allowance for uncollectible accounts		513,456		–
Other		(166,758)		(29,869)
Valuation allowance		(359,855)		(12,783,145)
Net deferred tax asset (liability)	$	–	$	–

In assessing the ability to realize deferred tax assets, management considers whether it is more likely than not that some portion or 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 those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Due to the uncertainty of the Company’s ability to recognize the benefit from the net operating losses, the Company has recorded a full valuation allowance against the deferred tax assets as at August 31, 2014 and 2013.

The Company recognizes tax benefits only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely to be realized upon settlement. Unrecognized tax benefits are tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards.

A reconciliation of the benefit for income taxes with amounts determined by applying the statutory federal income tax rate to income before income taxes and noncontrolling interests is as follows:

	Year Ended August 31,
	2014		2013
Benefit for income taxes computed using the statutory rate of 35%	$	(1,327,538)	$	(1,210,767)
Noncontrolling interest in loss of consolidated subsidiaries		(134)		993
Non-deductible expenses/other		901,932		(128,822)
Changes in valuation allowance		425,740		1,338,596
Expense for income taxes	$	—	$	—

The Company files tax returns in the U.S. federal, state of Texas and foreign jurisdictions. The federal statute limitation is open for tax year ending on and after August 31, 2012 and the State of Texas statute limitation is open for the report years 2012 through 2014. At August 31, 2014, we had approximately $24.6 million of federal net operating loss carryforwards, which, if not utilized, will expire at various dates from 2029 through 2033.