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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes
NOTE M – INCOME TAXES
As of December 31, 2021, the Company had consolidated income tax net operating loss (“NOL”) carryforwards for federal tax purposes of approximately $208,889,722 and net operating loss carryforwards for foreign income tax purposes of approximately $74,888,328. The federal NOL carryforwards from 2005
and
forward will expire in various years beginning 2025 and ending through the year 2035. From 2025 through 2027, approximately $47 million of the NOL will expire, and from 2028 through 2037, approximately $128 million of the NOL will expire. The NOL generated in 2018 through 2021 of approximately $34M will be carried forward indefinitely.
The components of the provision for income tax (benefits) are attributable to continuing operations as follows:
 
    
December 31, 2021
     
December 31, 2020
     
December 31, 2019
  
Current
                           
Federal
    $ —      $ —        $ —    
State
      —        —          —    
    
 
 
     
 
 
     
 
 
  
     $ —      $ —        $ —    
    
 
 
     
 
 
     
 
 
  
Deferred
                           
Federal
    $ —      $ —        $ —    
State
      —        —          —    
    
 
 
     
 
 
     
 
 
  
     $ —      $ —        $ —    
    
 
 
     
 
 
     
 
 
  
Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:
 
 
  
December 31, 2021
 
  
December 31, 2020
 
Deferred tax assets:
  
      
  
      
Net operating loss and tax credit carryforwards
    $ 72,201,754  
 
 
$
66,867,637

Capital loss carryforward
      5,514  
 
 
5,683
 
Accrued expenses
      363,149  
 
 
253,374
 
Start-up
costs
      5,664  
 
 
5,837
 
Excess of book over tax depreciation
      259,667  
 
 
394,649
 
Stock option and restricted stock award expense
      1,429,488  
 
 
1,464,210
 
Debt Extinguishment
      58,161  
 
 
59,934
 
Less: valuation allowance
      (74,138,667 ) 
 
 
(68,859,984
)
    
 
 
  
 
 
 
 
     $ 184,730  
 
$
191,340
 
    
 
 
  
 
 
 
 
Deferred tax liability:
         
 
 
 
 
Property and equipment basis
    $ 10,434  
 
$
48,545
 
Prepaid expenses
      174,296  
 

142,795
 
    
 
 
  
 
 
 
 
     $ 184,730  
 
$
191,340
 
    
 
 
  
 
 
 
 
Net deferred tax asset
    $ —  
 
$
—
 
    
 
 
  
 
 
 
 
As reflected above, we have recorded a net deferred tax asset of $0 at December 31, 2021. As required by the Accounting for Income Taxes topic in the ASC, we have evaluated whether it is more likely than not that the deferred tax assets will be realized. Based on the available evidence, we have concluded that it is more likely than not that those assets would not be realized without the recovery and rights of ownership or salvage rights of high-value shipwrecks or other forms of taxable income, thus a valuation allowance has been recorded as of December 31, 2021.
The change in the valuation allowance is as follows:
 
December 31, 2021
    $ 74,138,667  
December 31, 2020
      68,859,984  
    
 
 
  
Change in valuation allowance
    $ 5,278,683  
    
 
 
  
The federal and state income tax provision (benefit) is summarized as follows for the years ended:
 
 
  
December 31, 2021
 
  
December 31, 2020
 
  
December 31, 2019
 
       
Expected (benefit)
    $ (3,386,834 )     $ (4,429,419 )     $ (3,254,942 ) 
Effects of:
                           
State income taxes net of federal benefits
      (570,116 )       (940,302 )       (156,858 ) 
Nondeductible expense
      (56,839 )       150,238        262,776  
Subpart F Income
      735,229        345,006        —  
Debt Extinguishment
      —        91,266         —  
Funder
Loan Proceeds
      —        2,482,252         —  
Change in valuation allowance
      6,229,371        4,815,784        5,170,161  
Foreign Rate Differential
      (2,950,811 )       (2,514,825 )       (2,021,137 ) 
    
 
 
     
 
 
     
 
 
  
     $ —      $ —        $ —    
    
 
 
     
 
 
     
 
 
  
The Company’s
effective
income tax rate is lower than what would be expected if the federal statutory rate were applied to income before income taxes primarily because of certain expenses deductible for financial reporting purposes that are not deductible for tax purposes, research and development tax credits, operating loss carryforwards, and adjustments to previously-recorded deferred tax assets and liabilities due to the enactment of the Tax Cuts and Jobs Act.
We have not recognized a material adjustment in the liability for unrecognized tax benefits and have not recorded any provisions for accrued interest and penalties related to uncertain tax positions.
The earliest tax year still subject to examination by a major taxing jurisdiction is 2017.