9. Income Taxes

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

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

	Year Ended December 31,
	2015		2014
Current:
Federal	$	–	$	–
State		14,875		3,843
Foreign		6,691		6,307
		21,566		10,150
Deferred:
Federal		77,428		(70,849	)
State		4,075		(10,654	)
		81,503		(81,503	)
Total provision (benefit) for income taxes	$	103,069	$	(71,353	)

The Company is subject to United States federal and state income taxes at an approximate rate of 38.25%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:

	Year Ended December 31,
	2015			2014
Statutory tax rate		38.25%			38.25%
Permanent differences		(3.00%	)		84.52%
Stock options		0.00%			0.00%
Foreign tax rate differential		0.10%			11.11%
Prior year true up		(0.15%	)		0.00%
Valuation allowance		(37.49%	)		(373.25%	)
Total		(2.29%	)		(261.59%	)

Deferred tax assets consist of the following at:

	Year Ended December 31,
	2015			2014
Deferred tax assets:
Net operating loss carryforward	$	339,052		$	64,544
Temporary differences		5,678			16,959
Stock-based compensation		1,715,623			377,833
Total gross deferred tax assets		2,060,354			459,336
Less: valuation allowance		(2,060,354	)		(384,140	)
Net deferred tax assets	$	–		$	75,196

At December 31, 2015, the Company had federal net operating losses of approximately $886 thousand which will begin to expire in 2029 and could be subject to certain limitations under section 382 of the Internal Revenue Code.

The Company has provided a valuation allowance at December 31, 2015 and 2014 of $2,060,354 and $384,140 respectively for its net deferred tax assets as it cannot conclude it is more likely than not all of the estimated net deferred tax assets will be realized. The valuation allowance increased by $1,676,214 and decreased $24,082 in 2015 and 2014, respectively.

As of December 31, 2015 and 2014, the Company did not have any unrecognized tax benefits. The Company's policy is to recognize interest and penalties related to income tax matters in income tax expense. The Company currently has no federal or state tax examinations in progress nor has it had any federal or state tax examinations since its inception.