Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

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INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 12 – INCOME TAXES

 

Deferred taxes are determined by applying the provisions of enacted tax laws and rates for the jurisdictions in which the Company operates to the estimated future tax effects of the differences between the tax basis of assets and liabilities and their reported amounts in the Company’s financial statements. A valuation allowance is established to reduce deferred tax assets if it is more likely than not that the related tax benefits will not be realized.

 

Due to losses since inception and for all periods presented, no income tax benefit or expense has been recognized as a full valuation allowance has been established for any tax benefit that would have been recognized for the loss in any period presented.

 

The components of income tax expense (benefit) for the years ended December 31, 2023 and 2022 are as follows:

           
    2023     2022  
             
Expected federal income tax benefit at statutory rate   $ 9,464,954     $ 7,184,840  
Non-deductible expenses     1,183,767       (288,249 )
Research and development credit     –       595,244  
Return to provision true up     108,959       93,285  
Change in valuation allowance     (10,757,680 )     (7,585,120 )
Income tax benefit   $ –     $ –  

 

Significant components of the Company’s deferred tax assets and liabilities at December 31, 2023 and 2022 are as follows:

           
    2023     2022  
Deferred tax assets                
Net operating losses   $ 15,468,757     $ 9,106,430  
Debt basis difference     5,121,397       –  
Depreciation and amortization     1,701,768       1,502,868  
Research & development credit     1,099,535       1,308,956  
Lease liability     246,704       322,167  
Stock-based compensation     3,235,732       3,103,037  
Inventory     152,749       1,290,968  
Accrued expenses     66,909       233,284  
Capital loss carryover     176,950       261,922  
Dealer rebates     459,713       161,469  
Other     21,828       15,605  
Total     27,752,042       17,306,705  
Valuation allowance     (27,171,016 )     (16,661,612 )
Net deferred tax asset     581,026       645,093  
Deferred tax liabilities                
Prepaid expenses     (342,421 )     (328,836 )
Right-of-use assets     (238,605 )     (316,257 )
Total net deferred taxes Deferred tax liabilities   $ –     $ –  

 

Management currently believes that since the Company has a history of losses it is more likely than not that the deferred tax regarding the loss carry forwards and other temporary differences will not be realized in the foreseeable future. The utilization of the Company’s net operating losses and credit carryovers may be subject to limitation due to the “change in ownership provisions” under Section 382 of the Internal Revenue Code. The Company’s cumulative net operating loss carry forward of $73.7 million as of December 31, 2023, may be limited in future years depending on future taxable income in any given fiscal year. The net operating losses can be carried forward indefinitely.

 

The Company has recorded no liability for income taxes associated with unrecognized tax benefits and has not recorded any liability associated with unrecognized tax benefits. Accordingly, the Company has not recorded any interest or penalty in regard to any unrecognized benefit.