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Income Taxes
12 Months Ended
Dec. 31, 2021
Income Taxes  
Income Taxes

 Note 11 – Income Taxes

 

The components of earnings before income taxes for the years ended December 31, 2021 and 2020 were as follows:

 

 

 

For the Years Ended December 31,

 

Income (loss) before income taxes

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Domestic

 

$

(10,030,200)

 

$

(11,725,500)

Foreign

 

 

(1,201,000)

 

 

-

 

Total income (loss) before income taxes

 

$(11,231,200)

 

$(11,725,500)

 

Income tax provision (benefit) consists of the following for the years ended December 31, 2021 and 2020:

 

Income tax provision (benefit):

 

For the Years Ended December 31,

 

Current

 

2021

 

 

2020

 

Federal

 

 

-

 

 

 

-

 

State

 

 

-

 

 

 

-

 

Foreign

 

 

-

 

 

 

-

 

Total Current

 

 

-

 

 

 

-

 

Deferred

 

 

 

 

 

 

 

 

Federal

 

 

-

 

 

 

-

 

State

 

 

-

 

 

 

-

 

Foreign

 

 

-

 

 

 

-

 

Total Deferred

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Total income tax provision (benefit)

 

$-

 

 

$-

 

A reconciliation of the income tax provision (benefit) by applying the statutory United States federal income tax rate to income (loss) before income taxes is as follows:

 

Rate Reconciliation

 

For the Years Ended December 31,

 

 

 

 

 

 

2021

 

 

 

 

2020

 

 

 

Expected tax at statutory rates

 

$(2,358,500)

 

 

21%

 

$(2,462,400)

 

 

21%

Permanent Differences

 

 

280,200

 

 

 

-2%

 

 

 

 

 

 

0%

State Income Tax, Net of Federal benefit

 

 

(411,900)

 

 

4%

 

 

319,800

 

 

 

-3%

State Rate Change-Federal Impact

 

 

171,600

 

 

 

-2%

 

 

-

 

 

 

0%

State Rate Change Adjustment

 

 

(817,300)

 

 

7%

 

 

-

 

 

 

0%

Foreign taxes at rate different than US Taxes

 

 

(43,700)

 

 

0%

 

 

-

 

 

 

0%

Current Year Change in Valuation Allowance

 

 

2,117,100

 

 

 

-19%

 

 

2,142,600

 

 

 

-18%

Prior Year True-Ups

 

 

1,062,500

 

 

 

-9%

 

 

-

 

 

 

0%

Income tax provision (benefit)

 

$-

 

 

 

0%

 

$-

 

 

 

0%

 

Deferred tax assets and liabilities are provided for significant income and expense items recognized in different years for tax and financial reporting purposes. Temporary differences, which give rise to a net deferred tax asset is as follows:

 

 

 

For the Years Ended December 31,

 

 

 

2021

 

 

2020

 

Deferred Tax Assets (Liabilities):

 

 

 

 

 

 

Stock Based Compensation

 

$

471,000

 

 

$

150,600

 

Depreciation

 

 

49,300

 

 

 

-

 

Fair Value of Options

 

 

-

 

 

 

396,100

 

ROU (Asset)

 

 

(169,600)

 

 

-

 

ROU Liability

 

 

171,100

 

 

 

-

 

Net Operating Losses (US)

 

 

12,580,100

 

 

 

10,734,000

Net Operating Losses (Foreign)

 

 

295,900

 

 

 

 

 

Net deferred tax assets (liabilities)

 

 

13,397,800

 

 

 

11,280,700

Valuation allowance

 

 

(13,397,800)

 

 

11,280,700

 

Net deferred tax assets (liabilities)

 

$-

 

 

$-

 

 

The domestic U.S. net operating loss carryforward increased from $42,616,847 at December 31, 2020 to $51,119,315 at December 31, 2021. After consideration of all the evidence, both positive and negative, management has recorded a full valuation allowance at December 31, 2021 and 2020, due to the uncertainty of realizing the deferred income tax assets. Out of the $51,240,386 net operating losses carry forward, $16,012,698 will begin to expire in 2028 and $35,106,617 will have an indefinite life. There are also net operating losses from Canada, France, Germany, Netherlands and UK total to 1,201,026 as of December 31, 2021.

 

The Internal Revenue Code includes a provision, referred to as Global Intangible Low-Taxed Income (“GILTI”), which provides for a 10.5% tax on certain income of controlled foreign corporations. We have elected to account for GILTI as a period cost if and when occurred, rather than recognizing deferred taxes for basis differences expected to reverse.

The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. U.S. federal income tax returns for 2018 and after remain open to examination. We and our subsidiaries are also subject to income tax in multiple states and foreign jurisdictions. Generally, foreign income tax returns after 2017 remain open to examination. No income tax returns are currently under examination. As of December 31, 2021 and 2020, the Company does not have any unrecognized tax benefits, and continues to monitor its current and prior tax positions for any changes. The Company recognizes penalties and interest related to unrecognized tax benefits as income tax expense. For the years ended December 31, 2021 and 2020, there were no penalties or interest recorded in income tax expense.