7. Income Taxes

The components of deferred tax assets at December 31, 2017 and 2016 are as follows:

Net operating loss carry forwards for tax purposes were approximately $28 million at December 31, 2017.  The losses generally will expire between 2017 and 2037. We used 24.56% and 37.63% effective tax rates for our projected available net operating loss carry-forwards as of December 31, 2017 and 2016, respectively. However, as a result of potential stock offerings and stock issuances in connection with acquisitions, as well as the possibility of the Company not realizing its business plan objectives and having future taxable income to offset, the Company's use of these NOLs may be limited under the provisions of Section 382 of the Internal Revenue Code of 1986, as amended.  The Company is in the process of evaluating the implications of Section 382 on its ability to utilize some or all of its NOLs.

In accordance with FASB ASC 740 "Income Taxes", valuation allowances are provided against deferred tax assets, if based on the weight of available evidence, some or all of the deferred tax assets may or will not be realized. Tax benefits of operating loss carry forwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carry forward period, and other circumstances. The Company has evaluated its ability to realize some or all of the deferred tax assets on its balance sheet and has established a 100% valuation allowance in the amount of $6,852,789 at December 31, 2017 and $9,577,046 at December 31, 2016. The valuation allowance decreased by approximately $2,720,000 and increased by approximately $515,000 in the years ended December 31, 2017 and 2016, respectively.