INCOME TAXES

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 9 – INCOME TAXES

The Company accounts for income taxes in accordance with ASC Topic No. 740, “Income Taxes.” This standard requires the Company to provide a net deferred tax asset or liability equal to the expected future tax benefit or expense of temporary reporting differences between book and tax accounting and any available operating loss or tax credit carry forwards.

After applying the provisions of Section 382 of the Internal Revenue Code, the unexpired net operating loss (“NOL”) carry forward at December 31, 2021 was approximately $20.7 million, of which, approximately $5.1 million generated in 2017 and prior, will expire between 2022 and 2037. Under the Tax Cuts and Jobs Act, the NOL generated during the years 2018 through 2021 of approximately $15.6 million will have an indefinite carryforward period but can generally only be used to offset 80% of taxable income in any particular year. We may be subject to certain limitations in our annual utilization of NOL carry forwards to off-set future taxable income pursuant to Section 382 of the Internal Revenue Code, which could result in NOLs expiring unused.

The non-current deferred tax asset is summarized below:

	2021			2020
Deferred tax assets
Net operating loss carry forwards	$	4,352,201		$	2,827,835
Inventory reserves		70,221			58,087
Bad debt and other reserves		561,944			562,248
Accrued expenses		35,579			16,817
Other temporary differences		1,134			630
Total deferred tax assets		5,021,079			3,465,617
Deferred tax liabilities
Depreciation and amortization		(17,001	)		(32,657	)
Valuation allowance		(5,004,078	)		(3,432,960	)
Net deferred tax asset	$	-		$	-

A 100% valuation allowance has been provided for all deferred tax assets, as the ability of the Company to generate sufficient taxable income in the future is uncertain.

Reconciliations of the expected federal income tax benefit based on the statutory income tax rate of 21% to the actual benefit for the years ended December 31, 2021 and 2020 are listed below.

	2021			2020
Expected federal income tax benefit	$	1,663,601		$	914,852
NOL carryover adjusted for expiration		(29,730	)		111,345
Equity method investment loss		(129,555	)		-
Meals and entertainment		(7,439	)		(24,859	)
Stock-based compensation		120,924			(103,657	)
PPP Loan Forgiveness		-			122,430
Other temporary differences		(46,683	)		-
Change in valuation allowance		(1,571,118	)		(1,020,111	)
Income tax expense (benefit)	$	-		$	-

All tax years starting with 2018 are open for examination.