Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v3.22.1
INCOME TAXES
 9 Months Ended
Sep. 30, 2021
INCOME TAXES  
INCOME TAXES

NOTE 13 – INCOME TAXES

The effective tax rate was 0.9% and 0% for the years ended December 31, 2021 and 2020, respectively. The effective tax rate differs from the federal tax rate of 21% for the year ended December 31, 2021 and 2020 due primarily to the full valuation allowance and other discrete items.

Reconciliation between the effective tax rate on loss before provision for income taxes and the statutory tax rate is as follows:

​

​

​

​

​

​

    

12/31/2021

 

Income tax expense (benefit) at federal statutory rate

 

21.0

%

Change in valuation allowance

​

(20.1)

%  

Permanent differences

​

(0.5)

%  

Other - net

 

0.5

%

Income tax expense (benefit)

 

0.9

%

​

​

NOTE 13 – INCOME TAXES (CONTINUED)

At December 31,2021 and 2020, the Company had federal and state net operating losses (“NOLs”) in the amount of $10,687,462 and $11,173,080, respectively. These NOLs expire from 2031 to 2041 or have indefinite lives as follows. However, the Tax Cuts & Jobs Act of 2017 limits the amount of net operating loss utilized each year after December 31, 2020 to 80% of taxable income.

​

​

​

​

​

​

​

​

​

    

Federal

    

States

12/31/2031

​

$

—

​

$

102,014

12/31/2036

​

 

—

​

 

210,633

12/31/2039

​

 

—

​

 

196,988

12/31/2040

​

 

—

​

 

383,854

12/31/2041

​

 

—

​

 

4,626,771

Indefinite life

​

 

10,687,462

​

 

5,652,820

Total

​

$

10,687,462

​

$

11,173,080

​

The Company is in process of evaluating the effects that a change in ownership under Internal Revenue Code Section 382, may limit the potential utilization of its NOLs going forward.  Temporary differences which give rise to a significant portion of deferred tax assets are as follows at:

​

​

​

​

​

​

​

​

​

    

December 31, 2021

    

December 31, 2020

Deferred income tax assets (liabilities):

​

​

​

​

​

​

Startup costs

​

$

1,001,272

​

$

463,690

Stock compensation - RSAs

 

​

584,881

 

​

434,384

Net operating loss - Federal

 

​

2,244,367

 

​

101,451

Net operating loss - State

 

​

522,491

 

​

46,209

Accrued Expenses

 

​

174,289

 

​

—

Amortization

 

​

(1,682,939)

 

​

—

Depreciation

 

​

(333,501)

 

​

—

Operating lease assets

 

​

(393,985)

 

​

—

Operating lease liabilities

 

​

350,236

 

​

—

​

 

​

2,467,111

 

​

1,045,734

Less: Valuation allowance

 

​

(4,468,123)

 

​

(1,045,734)

Deferred tax liabilities, net

​

$

(2,001,012)

​

​

—

​

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred since inception. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. On the basis of this evaluation, as of December 31, 2021, a valuation allowance of $4,468,123 has been recorded to recognize the portion of the deferred tax asset that is more likely than not to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth.

The Company and its subsidiaries income tax returns for 2019 and 2020 are open to review by the tax authorities.