Income Taxes

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Income Taxes

12. INCOME TAXES

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“the Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a United States corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017.

Management is in the process of reviewing “the Act”, but has not completed its analysis at the statement date.

The components of the provision for income tax expense are as follows for the years ended:

		December 31,
		2017		2016
Current taxes
Federal	$	—	$	—
State		—		—
Current taxes		—		—
Change in deferred taxes		—		—
Change in valuation allowance		—		—
Provision for income tax expense	$	—	$	—

The following is a summary of the significant components of the Company’s deferred tax assets and liabilities at December 31, 2017:

Deferred tax assets:
Equity based compensation	$	394,504
Allowance for doubtful accounts		17,000
Net operating loss carryforward		625,893
On-line training certificate reserve		2,331
Total deferred tax assets		1,039,728
Valuation allowance		(1,037,208	)
Deferred tax assets net of valuation allowance		2,520
Less deferred tax assets – non-current, net of valuation allowance		2,520
Deferred tax assets – current, net of valuation allowance	$	—

The effective tax rate used for calculation of the deferred taxes as of December 31, 2017 was 24.63%. The Company has established a valuation allowance against deferred tax assets of $1,037,208 or 99.8%, due to the uncertainty regarding realization, comprised primarily of a 100% reserve against the net operating carryforward, 100% reserve against the allowance for doubtful accounts, and 99% reserve against the deferred tax assets attributable to the equity based compensation.

The following is a summary of the significant components of the Company’s deferred tax assets and liabilities at December 31, 2016:

Deferred tax assets:
Equity based compensation	$	210,263
Allowance for doubtful accounts		15,000
Net operating loss carryforward		1,015,748
On-line training certificate reserve		818
Total deferred tax assets		1,241,829
Valuation allowance		(1,239,309	)
Deferred tax assets net of valuation allowance		2,520
Less deferred tax assets – non-current, net of valuation allowance		2,330
Deferred tax assets – current, net of valuation allowance	$	190

The effective tax rate used for calculation of the deferred taxes as of December 31, 2016 was 37.63%. The Company has established a valuation allowance against deferred tax assets of $1,239,309 or 99.8%, due to the uncertainty regarding realization, comprised primarily of a 100% reserve against the net operating carryforward, 100% reserve against the allowance for doubtful accounts, and 99% reserve against the deferred tax assets attributable to the equity based compensation.

The significant differences between the statutory tax rate and the effective tax rates for the Company for the years ended are as follows:

	December 31,
	2017			2016
Statutory tax rate		34.00	%		34.00	%
State tax, net of Federal benefits		3.63	%		3.63	%
Change in valuation allowance		(37.63	)%		(37.63	)%
Effective tax rate		—	%		—	%