Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes [Text Block]

15. Income Taxes

The Company did not recognize a tax provision or benefit for the years ended December 31, 2022 and 2021 due to ongoing net losses and a valuation allowance. The income tax provision (benefit) for the years ended December 31, 2022 and 2021 differ from the statutory rate of 21% as follows:

		2022			2021
Benefit computed using the statutory rate	$	(3,189,000	)	$	(82,000	)
Impact of state income tax		(1,008,000	)		(26,000	)
Non-deductible (taxable) items		2,687,000			(73,000	)
Change in valuation allowance		1,510,000			181,000
Total income tax provision (benefit)	$	-		$	-

At December 31, 2022 and 2021, the Company had net deferred tax assets as follows:

		2022			2021
Net operating loss carryforwards	$	2,992,000		$	1,483,000
Capitalized assets		776,000			826,000
Lease liability		-			84,000
Finance-related		188,000			-
		3,956,000			2,393,000
Valuation allowance		(3,880,000	)		(2,370,000	)
Deferred tax assets		76,000			23,000
Warrant derivative		(53,000	)
Other		(23,000	)		(23,000	)
Deferred tax liabilities		(76,000	)		(23,000	)
Net deferred tax assets	$	-		$	-

As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the deferred tax assets, a valuation allowance equal to 100% of the net deferred tax asset exists at December 31, 2022 and 2021. At December 31, 2022 the Company had net operating loss carry forwards of approximately $10.8 million for federal and state purposes. Utilization of the carryforwards is limited to 80% of taxable income in any given year.

In 2022, the Company acquired two companies that have net operating loss carryforwards. Due to limitations, it is possible that a portion of carryforward will not be available to offset the Company's future taxable income. The Company is currently assessing these potential limitations.

The Company has analyzed its filing positions in all jurisdictions where it is required to file income tax returns and found no positions that would require a liability for uncertain income tax benefits to be recognized. The Company is subject to possible tax examinations for the fiscal years 2019 through 2021. Prior year tax attributes could be adjusted by taxing authorities. If applicable, the Company will deduct interest and penalties as interest expense on the consolidated financial statements.