Annual report pursuant to Section 13 and 15(d)


12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  




The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes were as follows:



    Years Ended December 31,  
    2021     2020  
Statutory federal income tax rate     21.0 %     21.0 %
State taxes, net of federal benefit     6.9 %     6.9 %
Non-deductible items     1.0 %     1.0 %
Change in valuation allowance     (28.9 )%     (28.9 )%
Effective income tax rate     0.0 %     0.0 %


Significant components of the Company’s deferred tax assets and liabilities are as follows:




Years Ended December 31,

    2021     2020  
Net operating loss carry-forwards   $


    $ 13,350,000  
Share based compensation     (422,000 )     (457,000 )
Non-cash interest and financing expenses     (358,000 )     (177,000 )
Other temporary differences     (388,000 )     (569,000 )
Less: Valuation allowance     (19,782,000 )     (12,147,000 )
Deferred tax assets, net   $ -     $ -  


ASC 740 requires that the tax benefit of net operating loss carry-forwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carry forward period. Because of the Company’s recent history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a 100% valuation allowance against the asset amounts.


Any uncertain tax positions would be related to tax years that remain open and subject to examination by the relevant tax authorities. The Company has no liabilities related to uncertain tax positions or unrecognized benefits for the years ended December 31, 2021 and 2020.


As of December 31, 2021 and 2020, the Company had federal net operating loss carry-forwards of approximately $79.2 million and $48.0 million, respectively, and state net operating loss carry-forwards of approximately $76.9 million and $45.7 million, respectively, which may be available to offset future taxable income for tax purposes. These net operating loss carry-forwards begin to expire in 2034. This carry-forward may be limited upon the ownership change under IRS Section 382. IRS Section 382 places limitations (the “Section 382 Limitation”) on the amount of taxable income which can be offset by net operating loss carry-forwards after a change in control (generally greater than 50% change in ownership) of a loss corporation. Generally, after a change in control, a loss corporation cannot deduct operating loss carry-forwards in excess of the Section 382 Limitation. Due to these “change in ownership” provisions, utilization of the net operating loss may be subject to an annual limitation regarding their utilization against taxable income in future periods. The Company has not concluded its analysis of Section 382 through December 31, 2021 but believes the provisions will not limit the availability of losses to offset future income.



The Company is subject to income taxes in the U.S. federal jurisdiction and the state of Nevada. The tax regulations within each jurisdiction are subject to interpretation of related tax laws and regulations and require significant judgment to apply. As of December 31, 2021, tax years 2015 through 2020 remain open for IRS audit. The Company has received no notice of audit from the IRS for any of the open tax years.