v3.23.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 11 - INCOME TAXES

 

The Company is subject to taxation in the United States of America and the state of California. The provision for income taxes for the years ended December 31, 2022 and 2021 is summarized below:

  

   December 31, 2022   December 31, 2021 
Current:          
Federal  $-   $- 
State   800    2,400 
Total current   800    2,400 
Deferred:          
Federal   -    - 
State   -    - 
Total deferred   -    - 
Income tax provision  $800   $2,400 

 

A reconciliation of income taxes computed by applying the statutory U.S. income tax rate to the Company’s income (loss) before income taxes to the income provision is as follows:

  

   December 31, 2022   December 31, 2021 
U.S. federal statutory tax rate   21.0000%   21.0000%
State tax benefit, net   (0.0277)%   (0.0778)%
Stock based compensation   0.0000%   0.0000%
Other   0.0000%   0.0000%
Change in valuation allowance   (21.0000)%   (21.0000)%
Effective income tax rate   (0.0277)%   0.0778%

 

Deferred tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets are as follows:

  

   December 31, 2022   December 31, 2021 
Deferred tax assets:          
NOL’s  $1,770,000   $1,828,000 
State taxes   -    - 
Inventory and other reserves   -    - 
Depreciation and amortization   -    - 
NQ stock option expense   14,698,000    14,698,000 
Total deferred tax assets   16,468,000    16,526,000 
Valuation allowance   (16,468,000)   (16,526,000)
Net deferred tax assets  $-   $- 

 

Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. The valuation allowance decreased by approximately $58,000 for the year ended December 31, 2022.

 

As of December 31, 2022, the Company had net operating loss carryforwards for federal income tax purposes of approximately $1,343,000. Net operating loss carryforwards for the years 2017 and prior expire beginning in the year 2034. Any operating loss carryforwards for the years 2018 and beyond may be carried forward indefinitely. As of December 31, 2022, the Company had net operating loss carryforwards for state income tax purposes of approximately $427,000 which expire beginning in the year 2034.

 

Utilization of the net operating losses may be subject to substantial annual limitation due to federal and state ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such annual limitations could result in the expiration of the net operating losses ad credits before their utilization. The Company has not performed an analysis to determine the limitation of the net operating loss carryforwards.

 

The Company has not filed any federal or state tax returns since its inception, but intends to file them in 2023.