• Filing Date: 2021-04-16
  • Form Type: 10-K/A
  • Description: Annual report (Amendment)
v3.21.1
H. INCOME TAXES
12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
INCOME TAXES

The Company has not recorded any income tax expense (benefit) for the period ended December 31, 2020 due to its history of net operating losses.

 

The reconciliation of income tax expense (benefit) at the statutory federal income tax rate of 21% for the periods ended December 31, 2020 and December 31, 2019 is as follows:

 

    December 31,  
    2020     2019  
U.S. federal tax benefit at statutory rate   $ (2,068,792 )   $ (1,762,816 )
State income tax benefit, net of federal benefit     (194,565 )     (165,789 )
Stock compensation     57,611       37,761  
Other nondeductible, including goodwill impairment     576       1,373  
Change in state tax rate     -       27,945  
Federal and state net operating loss adjustments     1,605,223       234,659  
Other, including effect of tax rate brackets     (56,640 )      (17,043 )
Change in valuation allowance     656,587       1,643,910  
    $ -     $ -  

 

The tax effects of temporary differences and carry forwards that give rise to significant portions of the deferred tax assets are as follows:

 

    December 31,  
Deferred Tax Assets   2020     2019  
Net operating loss carryforwards   $ 35,540,911     $ 34,933,500  
Accruals and other     545,225       498,572  
Capital loss carryforwards     11,003       16,908  
Valuation allowance     (36,096,792 )     (35,440,205 )
Net deferred tax assets     347       8,775  
Deferred Tax Liabilities                
Other liabilities     (347 )     (8,775 )
Net Deferred Tax Liabilities   $ -     $ -  

 

The Company has established a valuation allowance against net deferred tax assets due to the uncertainty that such assets will be realized. The Company periodically evaluates the recoverability of the deferred tax assets. At such time that it is determined that it is more likely than not that deferred tax assets will be realizable, the valuation allowance will be reduced. The net increase in the valuation allowance during 2020 was approximately $0.7 million.

 

As of December 31, 2020, the Company had Federal and State net operating loss carryforwards of approximately $153.0 million and $109.3 million available to offset future federal and state taxable income, respectively. Federal net operating losses of $128.7 million begin to expire in 2021, while the remaining $24.3 million carryforward indefinitely. State net operating losses begin to expire in 2024.

 

Utilization of the net operating loss carryforwards may be subject to an annual limitation due to the ownership percentage change limitations provided by the Internal Revenue Code of 1986 and similar state provisions. The annual limitations may result in the expiration of the net operating losses before utilization.

 

Management has evaluated all other tax positions that could have a significant effect on the financial statements and determined the Company had no uncertain income tax positions on December 31, 2020.

 

The Company files U.S. and state income tax returns with varying statutes of limitations. The tax years 2002 and forward remain open to examination due to the carryover of unused net operating losses or tax credit.