Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Note 10 – Income Taxes

For the year ended December 31, 2022 and 2021, the Company recorded no income tax benefit for the net operating losses incurred during the year, due to the uncertainty of realizing a benefit from those items.

The following is a reconciliation of the statutory federal income tax rate to the effective tax rate reported in the financial statements: 

	December 31, 2022
Income tax expense (benefit) at federal statutory rate		(1,448,463	)	21.00%
State and local income taxes, net of federal tax benefit		(307,021	)	4.45%
Prior year true-ups		39,787		-0.58%
Other		31,442		-0.46%
Changes in valuation allowance		1,684,255		-24.42%
Total provision expense (benefit) for income taxes	$	0		0.00%

Significant components of the Company’s deferred taxes consisted of the following:  

	December 31, 2022
Deferred tax assets:
Stock based compensation		618,691
Federal net operation losses		2,324,319
State net operation losses		397,846
Other assets		12,772
Total deferred tax assets	$	3,353,628
Less: Valuation allowance		(2,787,033	)
Total deferred tax assets, net of valuation allowance	$	566,595
Deferred tax liabilities:
Capitalized software		(556,492	)
Property & equipment		(10,103	)
Total deferred tax liabilities	$	(566,595	)
Total net deferred tax asset (liability)	$	–

For the period ended December 31, 2022, the Company has federal and state net operating loss carryforwards of $11,068,185 and $11,068,185, respectively.

The Federal net operating loss carryforwards do not have an expiration, however, are limited to 80% of the excess of taxable income over the total Net Operating Loss Deduction, the state net operating loss carryforwards will conform to the federal provisions.

Additionally, after weighting all available and positive and negative evidence for the period ended December 31, 2022, the Company has recorded a valuation allowance of $(2,787,033).

The Company continuously monitors its current and prior filing positions in order to determine if any unrecognized tax positions need to be recorded. The analysis involves considerable judgement and is based on the best information available. For the period ended December 31, 2022, the Company is not aware of any positions which require an uncertain tax position liability.

The Company is subject to taxation in the United States and Colorado. The statute of limitations on the initial tax return filed for 2021 tax year will expire in 2025 for federal and in 2026 for state jurisdictions.