INCOME TAXES

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

NOTE 8. INCOME TAXES

The Company’s income tax provision was $0 with an effective tax rate of 0% for the three and nine months ended September 30, 2016. The Company’s effective tax rate differs from the statutory rate primarily due to the valuation allowance on the Company’s net deferred tax assets with finite life.

As a result of historical losses, the Company recorded a valuation allowance on the net deferred tax asset with a finite life and does not anticipate recording an income tax benefit related to these deferred tax assets. The Company reassesses the realization of deferred tax assets each reporting period and will be able to reduce the valuation allowance to the extent that the financial results of these operations improve and it becomes more likely than not that the deferred tax assets are realizable.

For the three and nine months ended September 30, 2016, we do not believe we had any significant uncertain tax positions nor did we have any interest or penalties related to any significant uncertain tax positions.

The Company is subject to U.S. federal income tax, state income tax and Bulgarian income tax. Until the respective statutes of limitations expire (which may be as much as 20 years while we have unused NOL’s), we are subject to income tax audits in the jurisdictions in which we operate.