Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes

Income Taxes

Note 10 — Income Taxes

The Company files U.S. federal and various state and foreign tax returns.

Pre-tax earnings consisted of the following for the years ended:

	December 31,		December 31,		December 31,
	2021		2020		2019
Pre-Tax Income (Loss)
U.S.	$	(39,906,101)	$	(18,238,773)	$	(26,482,033)
Outside the U.S.		(471,059)		286,601		5,663
Total Pre-Tax Income (Loss)	$	(40,377,160)	$	(17,952,172)	$	(26,476,370)

The provision expense/(benefit) for income taxes for the years ended December 31, 2021, 2020 and 2019 was as follows:

	2021		2020		2019
U.S. Income Taxes:
Current Provision	$	—	$	—	$	—
Deferred Provision		(8,924,947)		(3,897,293)		(5,382,746)
Valuation Allowance		8,924,947		3,897,293		5,382,746
Income Taxes Outside the U.S.:
Current Provision		—		—		—
Deferred Provision		(341,181)		7,916		(511,672)
Valuation Allowance		341,181		(7,916)		511,672
State Income Taxes:
Current Provision		—		—		—
Deferred Provision		(636,401)		(94,324)		(189,200)
Valuation Allowance		636,401		94,324		189,200
Total Provision	$	—	$	—	$	—

A reconciliation of the statutory U.S. federal income tax rate to the effective rates for the years ended December 31, 2021, 2020 and 2019 is as follows:

	2021	2020	2019
	%	%	%
Federal Income Tax at Statutory Rate	21.0	21.0	21.0
State Tax Provision, Net of Federal Benefit	1.6	0.3	0.3
Permanent Differences	—	(0.4)	(0.1)
Forgiveness of PPP Loan	—	1.8	—
Federal Tax Credits	0.2	1.1	1.3
Stock Compensation	1.5	(2.1)	(1.9)
Foreign Tax Provision	0.6	0.3	1.9
Expiration of NOL, Credits, Charitable Contribution	(0.7)	0.1	—
Other	0.3	0.1	0.5
Effective Tax Rate	24.5	22.2	23.0
Change in Valuation Allowance	(24.5)	(22.2)	(23.0)
Net Effective Tax Rate	—	—	—

Significant components of the Company’s deferred tax assets and liabilities at year end are as follows:

	December 31,		December 31,		December 31,
	2021		2020		2019
Deferred Tax Assets:
Net Operating Loss Carry-forwards	$	36,705,377	$	29,264,829	$	25,678,591
Tax Credit Carry-forwards		3,924,660		3,778,001		3,535,863
Inventory Valuation Adjustment		290,713		847,441		982,160
Stock-Based Compensation		2,989,427		208,803		—
Lease Obligation Liability		240,741		323,186		446,488
Other		425,737		368,243		263,348
Total Deferred Tax Assets		44,576,655		34,790,503		30,906,450
Deferred Tax Liabilities:
Income from Foreign Operations		—		10,727		—
Lease Right of Use Asset		240,741		323,186		446,488
Other		4,057		27,262		14,335
Total Deferred Tax Liabilities		244,798		361,175		460,823
Net Deferred Tax Assets Before Valuation Allowance	$	44,331,857	$	34,429,328	$	30,445,627
Valuation Allowance		(44,331,857)		(34,429,328)		(30,445,627)
Net Deferred Tax Assets	$	—	$	—	$	—

As of December 31, 2021, the Company has approximately $167.1 million in US federal net operating loss (NOL) carry-forwards and $2.2 million of Japanese NOL carryforwards. The federal NOL carryforwards generated in tax years prior to 2018 will began to expire in 2022. The federal NOL carryforwards generated in tax years after 2017 have no expiration. The Company has state NOL carryforwards of approximately $6.8 million available in various jurisdictions in which it files that will begin to expire in 2034. The Company also has approximately $3.9 million of federal and state credit carry-forwards. The federal and state credit carryforwards began to expire in 2022. Utilization of the NOL and credit carryforwards may be subject to an annual limitation in the case of sufficient equity ownership changes under Section 382 of the tax law or the carryforwards may expire unutilized.

As the result of the assessment of the FASB ASC 740-10 (Prior Authoritative Literature: FASB Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109), the Company has no unrecognized tax benefits.

The Company’s U.S. federal and state tax returns for the years 2018 through 2021 remain subject to examination by the respective tax authorities.

FASB ASC 740 (Prior Authoritative Literature: SFAS No. 109, Accounting for Income Taxes), requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differing treatment of items for financial reporting and income tax reporting purposes. The deferred tax balances are adjusted to reflect tax rates by tax jurisdiction, based on currently enacted tax laws, which will be in effect in the years in which the temporary differences are expected to reverse. In light of the historic losses of the Company, a 100% valuation allowance has been recorded to fully offset any benefit associated with the net deferred tax assets, for which realization is not considered more likely than not to occur.