INCOME TAXES

12 Months Ended

Jul. 31, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 8 - INCOME TAXES

On December 22, 2017H.R. 1, originally known as the Tax Cuts and Jobs Act, (the “Tax Act”) was enacted. Among the significant changes to the U.S. Internal Revenue Code, the Tax Act lowers the U.S. federal corporate income tax rate (“Federal Tax Rate”) from 34% to 21% effective January 1, 2018. The 21% Federal Tax Rate will apply to earnings reported for the full 2018 fiscal year. In addition, the Company must re-measure its net deferred tax assets and liabilities using the Federal Tax Rate that will apply when these amounts are expected to reverse. As of July 31, 2018, the Company can determine a reasonable estimate for certain effects of tax reform and is recording that estimate as a provisional amount. The provisional remeasurement of the deferred tax assets and allowance valuation of deferred tax assets at July 31, 2018 resulted in a net effect of $0 discrete tax expenses (benefit) which lowered the effective tax rate by 13% for the year ended July 31, 2018. The provisional remeasurement amount is anticipated to change as data becomes available allowing more accurate scheduling of the deferred tax assets and liabilities primarily related to net operating losses carryover.

The income tax provision (benefit) for the years ended July 31, 2019 and 2018 consists of the following:

	July 31,			July 31,
	2019			2018
Net loss for the year	$	(1,017,643	)	$	(1,820,123	)
Income tax benefit at statutory rate	$	213,705		$	382,226
Permanent difference and other		—			(286,544	)
Change in valuation allowance		(213,705	)		(95,682	)
Income tax provision, net	$	—		$	—

The reconciliation of the effective tax rate reflected in the provision for income taxes to the U.S. federal statutory rate as of July 31, 2019 and 2018:

	As of July 31,
	2019			2018
Statutory tax benefit		(21	)%		(21)	%
Increase in valuation allowance	21		%	21		%
Provision for income taxes		—	%		—	%

The Company assesses the likelihood that deferred tax assets will not be realized. ASC 740, “Income Taxes” requires that a valuation allowance be established when it is “more likely than not” that all, or a portion of, deferred tax assets will not be realized. A review of all available positive and negative evidence needs to be considered, including the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. After consideration of all the information available, management believes that uncertainty exists with respect to future realization of its deferred tax assets and has, therefore, established a full valuation allowance as of July 31, 2019 and 2018.

Net deferred tax assets consist of the following components as of:

	July 31,			July 31,
	2019			2018
Net operating losses (NOLs) carryforward	$	588,563		$	547,682
Effect of change in the statutory rate		—			(172,824	)
Valuation allowance		(588,563	)		(374,858	)
Net deferred tax asset	$	—		$	—

The Company has not completed its evaluation of NOL utilization limitation under IRC Section 382, change of ownership rules, but believes that it had a change of ownership that would limit the amount of the U.S. NOLs that could be utilized each year based on the provisions of Section 382.