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INCOME TAXES | 12 Months Ended
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Dec. 31, 2021
INCOME TAXES |
NOTE 7 - INCOME TAXES | NOTE 7 – INCOME TAXES The Company provides for income taxes using an asset and liability approach under which deferred income taxes are provided for based upon enacted tax laws and rates applicable to periods in which the taxes become payable. The domestic and foreign components of income (loss) before (benefit) provision for income taxes were as follows:
|  | 12/31/2021 |  |  | 12/31/2020 |
Domestic |  | $ | (8,365,297 | ) |  | $ | (2,901,276 | )
Foreign |  |  | 517,659 |  |  |  | 4,099,597 |
|  | $ | (7,847,638 | ) |  | $ | 1,198,321 |
The components of the (benefit) provision for income taxes are as follows:
|  | 12/31/2021 |  |  | 12/31/2020 |
Current tax provision |  |  |  |  |  |
Federal |  | $ | - |  |  | $ | - |
State |  |  | - |  |  |  | - |
Foreign |  |  | 802,364 |  |  |  | 555,965 |
Total current tax provision |  | $ | 802,364 |  |  | $ | 555,965 |
Deferred tax provision |  |  |  |  |  |  |  |
Domestic |  | $ | - |  |  | $ | - |
State |  |  | - |  |  |  | - |
Foreign |  |  | (688,354 | ) |  |  | (178,430 | )
Total deferred tax provision |  | $ | (688,354 | ) |  | $ | (178,430 | )
Total current provision |  | $ | 114,010 |  |  | $ | 377,535 |
The reconciliation of income tax expense computed at the U.S. federal statutory rate to the income tax provision for the years ended December 31, 2021 and 2020 is as follows:
|  |  | 12/31/2021 |  |  | 12/31/2020 |
US |  |  |  |  |  |  |
Income (loss) before income taxes |  |  | $ | (7,847,639 | ) |  | $ | 1,198,321 |
Taxes under statutory US tax rates |  |  | $ | (1,648,004 | ) |  | $ | 251,647 |
Increase (decrease) in taxes resulting from: |  |  |  |  |  |  |  |  |
Increase in valuation allowance |  |  | $ | 3,001,899 |  |  | $ | 216,518 |
Foreign tax rate differential |  |  | $ | (24,977 | ) |  | $ | (55,540 | )
Permanent differences |  |  | $ | (734,428 | ) |  | $ | (218,216 | )
US tax on foreign income |  |  | $ | 493,028 |  |  | $ | 604,419 |
163(j) catch up |  |  |  | (76,888 | ) |  |  | - |
Prior period adjustments |  |  | $ | 52,034 |  |  | $ | (97,829 | )
State taxes |  |  | $ | (948,654 | ) |  | $ | (323,464 | )
Income tax expense |  |  | $ | 114,010 |  |  | $ | 377,535 |
Companies subject to the Global Intangible Low-Taxed Income provision (GILTI) have the option to account for the GILTI tax as a period cost if and when incurred, or to recognize deferred taxes for outside basis temporary differences expected to reverse as GILTI. We have elected to account for GILTI as a period cost. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities consist of the following:
|  | 12/31/2021 |  |  | 12/31/2020 |
Net operating loss carryforward |  | $ | 4,515,900 |  |  | $ | 1,494,424 |
Capital loss carryforward |  |  | 801,744 |  |  |  | 801,744 |
Section 163(j) carryforward |  |  | - |  |  |  | - |
Nonqualified stock options |  |  | 96,104 |  |  |  | 170,297 |
Foreign exchange |  |  | 13,438 |  |  |  | - |
Allowance for doubtful accounts |  |  | 374,604 |  |  |  | - |
Accrued expenses |  |  | 528,895 |  |  |  | 7,389 |
Mark to market adjustment in securities |  |  | 358,761 |  |  |  | 357,829 |
Lease liability |  |  | 253,620 |  |  |  | 247,797 |
Gain on extinguishment of debt |  |  | - |  |  |  | 179,958 |
Depreciation |  |  | (6,765 | ) |  |  | 4,226 |
Total deferred tax assets |  |  | 6,936,211 |  |  |  | 3,263,664 |
Intangibles |  |  | (8,139 | ) |  |  | (10,729 | )
Inventory |  |  | (14,728 | ) |  |  | - |
Right of use asset |  |  | (243,207 | ) |  |  | (253,818 | )
Goodwill |  |  | (10,979 | ) |  |  | (14,473 | )
Total deferred tax liabilities |  |  | (277,053 | ) |  |  | (279,020 | )
Valuation allowance |  |  | (5,808,384 | ) |  |  | (2,806,214 | )
Net deferred tax assets (liabilities) |  | $ | 850,774 |  |  | $ | 178,430 |
At December 31, 2021, the Company had U.S. net operating loss ("NOL") carryforwards of approximately $12,513,177 that may be offset against future taxable income, subject to limitation under IRC Section 382. Of the $12.5 million Federal NOL carryforwards, $2.5 million are pre-2018 and begin to expire in 2031. The remaining balance of $10 million, are limited to utilization of 80% of taxable income but do not have an expiration. At December 31, 2021, the Company had fully utilized all the Greek NOL carryforwards and has an NOL of $546,683 in the UK. A valuation allowance exists for the U.S. operations, but not for the non-U.S. operations, based on a more likely than not criterion and in consideration of all available positive and negative evidence. ASC 740 requires that the tax benefit of net operating losses ("NOLs"), temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is "more likely than not." Realization of the future tax benefits is dependent on the Company's ability to generate sufficient taxable income within the carryforward period. Because of the Company's history of domestic operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a valuation allowance, on our U.S. net domestic deferred tax assets. In 2020, foreign (Greece and United Kingdom) valuation allowances were released, aggregating $200,000. Management considered all available evidence to when evaluating the realizability of foreign deferred tax assets by jurisdiction and concluded primarily based upon a strong earnings history that these deferred tax assets were more-likely-than-not realizable. The Company applied the "more-likely-than-not" recognition threshold to all tax positions taken or expected to be taken in a tax return, which resulted in no unrecognized tax benefits as of December 31, 2021 and December 31, 2020, respectively. We recognize interest accrued related to unrecognized tax benefits and penalties as income tax expense. The Company files income tax returns in Illinois, United States, and in foreign jurisdictions including Greece, and United Kingdom. As of December 31, 2021, all domestic tax years are open to tax authority examination due the availability of net operating loss deductions, 2010 through 2021. In Greece, the statute of limitations is open for five years, 2016 through 2021. In United Kingdom, the statute of limitations is open for four years, 2017 through 2021. Currently, there are no ongoing tax authority income tax examinations. As of December 31, 2021, the Company had $1.7 million of undistributed earnings and profits for which no deferred tax liabilities have been recorded, since the Company intends to indefinitely reinvest such earnings to fund the international operations and certain obligations of the subsidiary. Should the above undistributed earnings be distributed in the form of dividends or otherwise, the distributions would result in $350.3 thousand of tax expense.

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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