Income Taxes

9 Months Ended

Sep. 30, 2022

Income Taxes [Abstract]

Income Taxes

NOTE 16 - Income Taxes

Income tax expense for the three-month and six-month periods ended September 30, 2022 and 2021 consisted of the following:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2022		2021			2022		2021
	(Unaudited)		(Unaudited)			(Unaudited)		(Unaudited)
Current:
Federal	$	-	$	-		$	-	$	-
State		-		-			1,600		1,600
Foreign		-		(12	)		-		1,657
Total	$	-	$	(12	)	$	1,600	$	3,257

The following table presents a reconciliation of the Company’s income tax at statutory tax rate and income tax at effective tax rate for the three months and nine months periods ended September 30, 2022 and 2021.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Tax expense (benefit) at statutory rate	$	(1,089,179	)	$	991,321		$	(2,495,186	)	$	(432,753	)
Net operating loss carryforwards (NOLs)					-			-			-
Foreign investment losses (gains)		(445,209	)		(1,329,427	)		(818,077	)		(886,390	)
Stock-based compensation expense		12,500			33,900			214,000			424,400
Amortization expense		24,600			21,740			68,200			67,795
Accrued payroll		(83,400	)		15,300			72,000			155,700
Unrealized exchange losses (gains)		252,712			(4,537	)		557,470			196,359
Others		(542,700	)		9,288			(1,040,000	)		42,857
Valuation allowance		1,870,676			262,403			3,443,193			435,289
Tax expense (benefit) at effective tax rate	$	-		$	(12	)	$	1,600		$	3,257

Deferred tax assets (liability) as of September 30, 2022 and December 31, 2021 consist approximately of:

	September 30, 2022			December 31, 2021
	(Unaudited)
Net operating loss carryforwards (NOLs)	$	12,863,000		$	9,802,000
Stock-based compensation expense		3,042,000			2,757,000
Accrued expenses and unpaid expense payable		639,000			634,000
Tax credit carryforwards		68,000			68,000
Unrealized exchange losses (gain)		470,000			(44,000	)
Excess of tax amortization over book amortization		(364,000	)		(468,000	)
Others		(115,000	)		(186,000	)
Gross		16,603,000			12,563,000
Valuation allowance		(16,603,000	)		(12,563,000	)
Net	$	-		$	-

Management does not believe the deferred tax assets will be utilized in the near future; therefore, a full valuation allowance is provided. The net change in deferred tax assets valuation allowance was an increase of approximately $1,578,000 for the nine months ended September 30, 2022.

As of September 30, 2022 and December 31, 2021, the Company had federal NOLs of approximately $8,243,000 available to reduce future federal taxable income, expiring in 2037, and additional federal NOLs of approximately $37,494,000 and $21,147,000, respectively, were generated and will be carried forward indefinitely to reduce future federal taxable income. As of September 30, 2022 and December 31, 2021, the Company had State NOLs of approximately $46,791,000 and $31,370,000 respectively, available to reduce future state taxable income, expiring in 2042.

As of September 30, 2022 and December 31, 2021, the Company has Japan NOLs of approximately $358,000 and $358,000, respectively, available to reduce future Japan taxable income, expiring in 2031.

As of September 30, 2022 and December 31, 2021, the Company has Taiwan NOLs of approximately $2,943,000 and $3,279,000, respectively, available to reduce future Taiwan taxable income, expiring in 2031.

As of September 30, 2022 and December 31, 2021, the Company had approximately $37,000 and $37,000 of federal research and development tax credit, available to offset future federal income tax. The credit begins to expire in 2034 if not utilized. As of September 30, 2022 and December 31, 2021, the Company had approximately $39,000 and $39,000 of California state research and development tax credit available to offset future California state income tax. The credit can be carried forward indefinitely.

The Company’s ability to utilize its federal and state NOLs to offset future income taxes is subject to restrictions resulting from its prior change in ownership as defined by Internal Revenue Code Section 382. The Company does not expect to incur the limitation on NOLs utilization in future annual usage.