Quarterly report pursuant to Section 13 or 15(d)

INCOME TAXES

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INCOME TAXES
 9 Months Ended
Sep. 30, 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.

 

Significant components of the Company's deferred tax assets and liabilities at September 30, 2023 and December 31, 2022 are as follows:

           
   

September 30,

2023

    

December 31,

2022

  
Deferred tax assets                
Net operating losses   $ 12,016,943     $ 9,106,430  
Depreciation and intangible assets     1,770,632       1,502,868  
Debt basis difference     5,029,077       –  
Research & development credit     1,457,768       1,308,956  
Lease liability     266,483       322,167  
Inventory     1,249,375       1,290,968  
Stock-based compensation     3,259,583       3,103,037  
Accrued expenses     154,650       233,284  
Capital loss carryover     276,522       261,922  
Other     222,062       177,074  
Total     25,703,095       17,306,705  
Valuation allowance     (25,244,039 )     (16,661,612 )
Net deferred tax asset     459,056       645,093  
Deferred tax liabilities                
Prepaid expenses     (200,526 )     (328,836 )
Right-of-use assets     (258,530 )     (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 Company believes that carryforward limitations will be applied to the historical net operating losses due to the change of control that occurred upon the completion of the Company’s initial public offering. The Company's cumulative net operating loss carry forward of approximately $57.2 million as of September 30, 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 at the date of adoption 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.