Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v2.4.1.9
INCOME TAXES
 12 Months Ended
Dec. 31, 2014
Income Tax Disclosure [Abstract]  
INCOME TAXES
9. 
INCOME TAXES
 
 
Prior to the completion of the Share Exchange Agreement on October 16, 2014, the Company did not have any deferred tax assets or liabilities, as the Company was an S-Corporation, and thus the income tax impact of the Company's operations was passed through to the stockholders. Therefore, the deferred tax activity presented below relates to the Company's operations subsequent to the Share Exchange Agreement.
 
Significant components of the Company's deferred tax assets and liabilities are as follows: 
 
 
December 31,
  
 
2014
  
 
  
Net operating loss carryforwards
  
$
555,899
  
Share based compensation
    
357,545
  
Intellectual property
    
254,539
  
Less: Valuation allowance
    
(1,167,983
)
Deferred tax assets, net
  
$
-
  
 
 
The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes were as follows:
 
 
December 31,
  
 
2014
  
   
Statutory federal income tax rate
34.0
%
State taxes, net of federal benefit
5.4
%
Non-deductible items
-2.3
%
Change in valuation allowance
-37.1
%
 
0.0
%
 
ASC 740 requires that the tax benefit of net operating losses carry forwards be recorded as an asset to the extent that management assesses that realization is "more likely than not." Realization of the future tax benefits is dependent on the Company's ability to generate sufficient taxable income within the carry forward period. Because of the Company's recent history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a 100% valuation allowance against the asset amounts.
 
Any uncertain tax positions would be related to tax years that remain open and subject to examination by the relevant tax authorities. The Company has no liabilities related to uncertain tax positions or unrecognized benefits as of the year end December 31, 2014 or 2013. The Company has not accrued for interest or penalties associated with unrecognized tax liabilities.
 
As of December 31, 2014, the Company had federal and state net operating loss carry forwards of approximately $1.8 million, which may be available to offset future taxable income for tax purposes. These net operating loss carry forwards begin to expire in 2034. This carry forward may be limited upon the ownership change under IRC Section 382.