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INCOME TAXES

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

18. INCOME TAXES

Due to recurring losses for the years ended December 31, 2019 and 2018, the Company's net tax provision was zero.

The difference between the effective income tax rate and the applicable statutory federal income tax rate is summarized as follows:

		2019				2018
Statutory federal rate			21.0	%			(21.0	)%
State income tax rate, net of federal benefit			4.35	%			(4.35	)%
Permanent differences, including stock-based compensation			9.25	%			5.6	%
Change in valuation allowance, including effect of change in tax rates			(34.60	)%			19.75	%
Difference in foreign tax rates			—				—	%
Effective tax rate			0.0	%			0.0	%

At December 31, 2019 and 2019, the Company's deferred tax assets were as follows:

Deferred Tax Liability		2019				2018
Property and equipment			(19,000	)			(2,000	)
Total deferred tax liability			(19,000	)			(2,000	)

Deferred Tax Assets		2019				2018
Federal and state net operating loss carry forward			8,400,000				12,082,000
Foreign net operating loss carry forward-Asia and Europe			7,900,000				3,123,000
Other temporary differences			169,000				63,000
Total deferred tax asset			16,469,000				15,268,000
Net deferred tax asset			16,450,000				15,266,000
Less valuation allowance			(16,450,000	)			(15,266,000	)
		$	—			$	—

The Company's valuation allowance increased by $1,184,000 and $2,012,000 during 2019 and 2018 respectively. Total net operating loss carry forwards at December 31, 2019 were approximately $33.1 million, of which approximately $31.9 million, will expire between 2029 and 2037 and $1.2 million may be carried forward indefinitely. China has corporate tax rate of 25% with net operating loss carry forwards expiring after 5 years. The Company had $14.7 million of net operating loss carry forwards in China as of December 31, 2019. Hong Kong has a corporate tax rate of 17% with net operating loss carry forwards that don't expire. The Company had $2.8million of net operating loss carry forwards in Hong Kong as of December 31, 2019. On October 25, 2019, the Company acquired wholly-owned foreign subsidiaries in Finland, Sweden and Norway. These companies had net operating loss carryforwards of $11.2 million in Finland and $12.9 million in Sweden. There were no net operating loss carryforwards in Norway. The Finland tax rate is 33.6% and the Sweden tax rate is 21.4%. Due to the uncertainty regarding the Company's ability to retain the tax benefits of these losses in Sweden, the Company has not included these net operating loss carryforwards as part of their deferred tax assets. The Company's net operating loss carry forwards may be limited due to ownership changes.

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- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

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