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

NOTE 12 – INCOME TAXES

 

As of December 31, 2022, the Company has approximately $94.3 million of operating loss carryforwards for federal income tax reporting purposes that may be applied against future taxable income. Portions of the net operating loss carryforwards will expire in 2023 if not utilized prior, and will continue to expire during various years through 2038. The net operating loss carryforwards could be subject to limitation in any given year in the event of a change in ownership as defined by Internal Revenue Code Section 382.

 

The valuation allowance overall increased by approximately $11.8 million and $20.8 million during the years ended December 31, 2022 and 2021, respectively. The Company has fully reserved the deferred tax asset resulting from available net operating loss carryforwards.

 

The income tax provision charged to continuing operations for the years ended December 31, 2022 and 2021 was as follows:

 

   2022   2021 
   December 31, 
   2022   2021 
Current:          
U.S. federal  $-   $- 
State and local   6,700    7,700 
Total   6,700    7,700 
Deferred:          
U.S. federal   1,719,000    - 
State and local   (1,365,000)   - 
Total   354,000    - 
Provision for income taxes  $360,700   $7,700 

 

 

The provision for income taxes differs from the expected amount of income tax expense (benefit) determined by applying a combined U.S. federal and state (Puerto Rico) income tax rate of 25% to pretax income (loss) for the years ended December 31, 2022 and 2021 as follows:

 

    2022     2021  
    December 31,  
    2022     2021  
Computed “expected” tax expense (benefit)   $ (9,474,000 )   $ (12,684,000 )
Increase (decrease) in income taxes resulting from:                
State taxes     (714,000 )     (618,000 )
Permanent differences     730,000       (52,000 )
Apportionment of Puerto Rico income     (108,000 )     76,000  
Nondeductible expenses     -       -  
Change in valuation allowance     9,973,000       13,192,000  
Other     (46,300 )     93,700  
Provision for income taxes   $ 360,700     $ 7,700  

 

Net deferred tax liabilities consist of the following components as of December 31, 2022 and 2021:

 

   2022   2021 
   December 31, 
   2022   2021 
Deferred tax liability:          
Other  $-   $- 
    -    - 
Deferred tax assets:          
Stock-based compensation   11,646,000    6,899,000 
Sec 174 – software development   

142,000

    - 
Temporary differences   2,389,000    1,201,000 
Net operating loss carryforwards   21,382,000    15,673,000 
Total   35,559,000    23,773,000 
Less valuation allowance   (35,559,000)   (23,773,000)
Total  $-   $-