v3.22.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 16 - INCOME TAXES

 

The Company operates in the United States and its wholly owned subsidiaries operate in Japan, Hong Kong and Switzerland and files tax returns in these jurisdictions.

 

Loss from continuing operations before income tax expense (benefit) is as follows:

 

   For the Years Ended 
   December 31, 
   2021   2020 
Tax jurisdiction from:          
- US  $(5,101,587)  $(21,957,557)
- Foreign          
Hong Kong (HK)   (79,656)   (257,753)
Japan (JP)   56,948    (20,988)
Switzerland (EU)   -    404,331 
Loss before income taxes  $(5,124,294)  $(21,789,991)

 

There was no provision for income taxes for the years ended December 31, 2021 and 2020, as the Company has tax losses in all jurisdictions. The expected approximate income tax rate for 2021 and 2020 for United States is 21%, Hong Kong is 16.5%, Japan is 30%, and Switzerland is 20%, whereas the actual rate was zero. The total income tax benefit differs from the expected income tax benefit principally due to the valuation allowance recorded against the deferred tax assets which are principally comprised of net operating losses (“NOLs”) and permanent differences due to a significant amount of non-cash income and expenses.

 

 

The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of December 31, 2021 and 2020:

 

         
   December 31, 
   2021   2020 
Deferred tax assets:          
NOL carry forwards          
United States – current rate  $5,513,210   $3,532,239 
United States – effect of change in statutory rate   -    - 
-Foreign   (50,327)   682,324 
Total   5,462,884    4,246,044 
Less: valuation allowance   (5,462,884)   (4,264,044)
Net deferred tax asset  $-   $- 

 

The Company applies the authoritative accounting guidance under ASC 740 for the recognition, measurement, classification, and disclosure of uncertain tax positions taken or expected to be taken in a tax return. The Company provided a full valuation allowance against its deferred tax assets as of December 31, 2021 and 2020. This valuation allowance reflects the estimate that it is more likely than not that the net deferred tax assets may not be realized.

 

The Company has approximately $5,100,000 of U.S. and foreign carry forwards, the tax effect of which is approximately $5,500,000 as of December 31, 2021. Certain of these carry forwards begin to expire in 2024.

 

The U. S. NOL carry forwards are subject to certain limitations due to the change in control of the Company pursuant to Internal Revenue Code Section 382. The Company has not performed a study to determine if the NOL carry forwards are subject to these Section 382 limitations. In addition, the Company has foreign NOLs. The Company is still evaluating the impact of a change in stock ownership and the potential limitation of foreign NOLs.

 

A valuation allowance is recorded on certain deferred tax assets if it has been determined it is more likely than not that all or a portion of these assets will not be realized. The Company has recorded a full valuation allowance of $5,462,884 and $4,264,044 for deferred tax assets existing as of December 31, 2021 and 2020, respectively. The change in the valuation allowance was an increase of $1,188,840 and $617,310 for the years ended December 31, 2021 and 2020, respectively. The valuation allowance as of December 31, 2021 and 2020 is attributable to NOL carry forwards in the United States and foreign jurisdictions.

 

The Company’s tax returns are subject to examination by tax authorities in the U.S., and various state and foreign jurisdictions. The Company is generally no longer subject to examinations for years prior to 2014. The Company is currently delinquent in its income tax filings.