Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v3.20.4
INCOME TAXES
12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]

NOTE 14 – INCOME TAXES

 

At December 31, 2020, the Company has available for federal income tax purposes a net operating loss carry forward of approximately $95,000,000, expiring in the year 2038, that may be used to offset future taxable income. The Company has provided a valuation reserve against the full amount of the net operating loss benefit, since in the opinion of management based upon the earnings history of the Company; it is more likely than not that the benefits will not be realized. Due to possible significant changes in the Company’s ownership, the future use of its existing net operating losses may be limited. All or portion of the remaining valuation allowance may be reduced in future years based on an assessment of earnings sufficient to fully utilize these potential tax benefits.  During the year ended December 31, 2020, the Company has increased the valuation allowance by $9,200,000 from $15,500,000 to $24,700,000.We have adopted the provisions of ASC 740-10-25, which provides recognition criteria and a related measurement model for uncertain tax positions taken or expected to be taken in income tax returns.  ASC 740-10-25 requires that a position taken or expected to be taken in a tax return be recognized in the financial statements when it is more likely than not that the position would be sustained upon examination by tax authorities.  

 

Tax position that meet the more likely than not threshold is then measured using a probability weighted approach recognizing the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement.  The Company had no tax positions relating to open income tax returns that were considered to be uncertain.

 

The Company is required to file income tax returns in the U.S. Federal various State jurisdictions. The Company is no longer subject to income tax examinations by tax authorities for tax years ending before December 31, 2014.

 

The effective rate differs from the statutory rate of 21% as of December 31, 2020 and 2019 due to the following:

 

   

December 31,

2020

   

December 31,

2019

 

Statutory rate on pre-tax book loss

    (21.00

)%

    (21.00

)%

(Gain) loss on change in fair value of derivatives

    -

%

    -

%

Stock based compensation

    8.10

%

    3.35

%

Fair value of warrant to acquire research and development

    1.59

%

    1.93

%

Other

    0.03

%

    0.04

%

Valuation allowance

    11.28

%

    15.68

%

      0.00

%

    0.00

%

 

The Company’s deferred taxes as of December 31, 2020 and 2019 consist of the following:

 

   

December 31,

2020

   

December 31,

2019

 

Non-Current deferred tax asset:

               

Net operating loss carry-forwards

  $ 19,900,000     $ 13,500,000  
Stock based compensation     4,800,000       2,000,000  

Valuation allowance

    (24,700,000

)

    (15,500,000

)

Net non-current deferred tax asset

  $ -     $ -