INCOME TAXES

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 9. INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A full valuation allowance is established against all net deferred tax assets as of March 31, 2022 and December 31, 2021 based on estimates of recoverability. While the Company has optimistic plans for its business strategy, it determined that such a valuation allowance was necessary given the current and expected near term losses and the uncertainty with respect to its ability to generate sufficient profits from its business model.

We did not provide any current or deferred US federal income tax provision or benefit for any of the periods presented in these financial statements because we have accumulated substantial operating losses over the years. When it is more likely than not, that a tax asset cannot be realized through future income, we must record an allowance against any future potential future tax benefit. We have provided a full valuation allowance against the net deferred tax asset, consisting of net operating loss carry forwards, because management has determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax assets during the carry forward periods.

The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements as of March 31, 2022 and December 31, 2021 as defined under ASC 740, “Accounting for Income Taxes.” We did not recognize any adjustment to the liability for uncertain tax position and therefore did not record any adjustment to the beginning balance of the accumulated deficit on the balance sheet.

A reconciliation of the differences between the effective and statutory income tax rates for the period ended March 31, 2022 and December 31, 2021:

	Percent			31-Mar-22			31-Dec-21
Federal statutory rates		21.0	%	$	(3,420,300	)	$	(3,603,574	)
State income taxes		5.0	%		(814,357	)		(857,994	)
Permanent differences		-0.5	%		81,436			85,799
Valuation allowance against net deferred tax assets		-25.5	%		4,153,221			4,375,769
Effective rate		0	%	$	-		$	-

At March 31, 2022 and December 31, 2021, the significant components of the deferred tax assets are summarized below:

	31-Mar-22			31-Dec-21
Deferred income tax asset
Net operation loss carryforwards		(16,287,141	)		(17,159,878	)
Total deferred income tax asset		4,234,657			4,461,568
Less: valuation allowance		(4,234,657	)		(4,461,568	)
Total deferred income tax asset	$	-		$	-

The Company has recorded as of March 31, 2022 and December 31, 2021, a valuation allowance of $4,234,657 and $4,461,568 respectively, as it believes that it is more likely than not that the deferred tax assets will not be realized in future years. Management has based its assessment on the Company’s lack of profitable operating history.

The valuation allowance $4,234,657 as at March 31, 2022 decreased by $226,912 compared to December 31, 2021 of $4,461,568, as a result of the Company generating additional net operating income of $599,264.

The Company conducts an analysis of its tax positions and has concluded that it has no uncertain tax positions as of March 31, 2022 and December 31, 2021.

The Company has net operating loss carry-forwards of approximately $16,287,141. Such amounts are subject to IRS code section 382 limitations and expire in 2033.