|6 Months Ended|
Jun. 30, 2018
|Notes to Financial Statements|
|NOTE 11. INCOME TAXES||
Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carry-forwards are expected to be available to reduce taxable income.
At June 30, 2018, the Company’s deferred tax assets consisted primarily of net operating loss carry forwards. For the three months ended June 30, 2018 and 2017, the material reconciling items between the tax benefit computed at the statutory rate and the actual benefit recognized in the consolidated financial statements consisted of expenses related to share-based compensation and the change in the valuation allowance during the applicable period. At June 30, 2018 and 2017, the Company has recorded a 100% valuation allowance as management believes it is likely that any deferred tax assets will not be realized.
As of June 30, 2018, the Company has a net operating loss carry forward of approximately $36.5 million, which will expire between years 2028 and 2036. Due to the change in ownership provisions of the Tax Reform Act of 1986, our net operating loss carry forwards are expected to be subject to significant annual limitations for the change in ownership that resulted in the merger with American Exploration.
On December 22, 2017, new federal tax reform legislation was enacted in the United States (the “2017 Tax Act”), resulting in significant changes from previous tax law. The 2017 Tax Act reduces the federal corporate income tax rate to a flat rate of 21%, from a graduated rate structure with a top rate of 35%, effective January 1, 2018. The rate change, along with certain immaterial changes in tax basis resulting from the 2017 Tax Act, resulted in a reduction of the Company’s net deferred tax assets of approximately $4.7 million, and a corresponding reduction in the valuation allowance.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/presentationRef