NOTE 11 - INCOME TAXES

12 Months Ended

Dec. 31, 2015

NOTE 11 – INCOME TAXES

The tax effects of temporary differences that give rise to deferred tax assets are presented below:

	For The Years Ended December 31,
Deferred Tax Assets:	2015			2014
Net operating loss carryforward	$	4,853,854		$	4,447,768
Stock-based compensation		2,403,765			2,205,340
Accounts receivable		14,501			-
Subsidiary investment		360,423			-
Total deferred tax assets		7,632,543			6,653,108

Deferred Tax Liabilities:
Fixed assets		303			-
Software development costs		60,584			-
Total deferred tax liabilities		60,887			-

Deferred tax asset, net		7,571,656			6,653,108

Valuation allowance		(7,571,656	)		(6,653,108	)

Deferred tax asset, net of valuation allowance	$	-		$	-

Changes in valuation allowance	$	918,548		$	1,463,191

The income tax provision (benefit) consists of the following:

	For The Years Ended December 31,
	2015			2014
Federal:
Current	$	-		$	-
Deferred		(918,548	)		(1,463,191	)

State and local:
Current		-			-
Deferred		-			-
		(918,548	)		(1,463,191	)
Change in valuation allowance		918,548			1,463,191
Income tax provision (benefit)	$	-		$	-

A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:

	For The Years Ended December 31,
	2015			2014

Tax benefit at federal statutory rate		(34.0	)%		(34.0	)%
Other non-deductible compensation subject to SEC 162(M)		0.0	%		10.1	%
Permanent differences		6.2	%		5.0	%
Change in valuation allowance		27.8	%		18.9	%
Effective income tax rate		0	%		0	%

The Company assesses the likelihood that deferred tax assets will be realized. To the extent that realization is not likely, a valuation allowance is established. Based upon the Company’s history of losses since inception, management believes that it is more likely than not that future benefits of deferred tax assets will not be realized.

At December 31, 2015 and 2014, the Company had $14,276,041 and $13,081,670, respectively, of federal net operating losses that may be available to offset future taxable income. The net operating loss carry forwards, if not utilized, will expire from 2031 to 2035 for federal purposes. In accordance with Section 382 of the Internal Revenue Code, the usage of the Company’s net operating loss carry forwards are subject to annual limitations in the event of a greater than 50% ownership change.

The Company files income tax returns in the U.S. federal and Texas jurisdictions and is subject to examination by taxing authorities beginning with the year ended December 31, 2012.