Income Taxes

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

Note 9 — Income Taxes

The income tax provision (benefit) consisted of the following:

	For The Years Ended
	December 31,
	2019			2018
Current – federal		—			—
Current – state		—			—
Deferred – federal		(601,575	)		(707,725	)
Deferred – international		(494,982	)		(40,038	)
Deferred – state		(43,303	)		(246,766	)
		(1,139,860	)		(994,529	)
Change in valuation allowance		1,139,860			994,529
Income tax provision (benefit)	$	—		$	—

For the years ended December 31, 2019 and December 31, 2018, the expected tax expense (benefit) based on the statutory rate is reconciled with the actual tax expense (benefit) as follows: 

	For The Years Ended
	December 31,
	2019			2018
U.S. federal statutory rate		(21.0	)%		(21.0	)%
State taxes, net of federal benefit		(6.1	)%		(4.8	)%
Foreign rate differential		(0.2	)%		(0.2	)
Permanent differences		3.2	%		2.4	%
Change in tax rates		(1.9	)%		(4.0	)%
Return-to-provision adjustments		(4.0	)%		(2.2	)
Tax credits		(37.1	)%		(19.3	)%
Other		—	%		—	%
Change in valuation allowance		67.1	%		49.2	%
Income tax provision (benefit)		0.0	%		0.0	%

As of December 31, 2019 and December 31, 2018, the Company's net deferred tax asset consisted of the effects of temporary differences attributable to the following:

	December 31,
	2019			2018
Net operating losses	$	1,701,503		$	1,458,744
Stock-based compensation		183,911			122,239
Depreciation and amortization		(94,400	)		(97,700
Accrued expenses and reserves		195,321			45,106
Prepaid expenses		(3,893	)		(1,256	)
Customer deposits		60,759			16,401
Tax credit		1,176,852			546,592
Charitable contributions		37,468			23,945
Other, net		204			3,795
Deferred tax asset, net		3,257,725			2,117,866
Valuation allowance		(3,257,725	)		(2,117,866	)
Deferred tax asset, net of valuation allowance		—			—

The Company has federal tax net operating loss carryforwards of approximately $5,587,000 as of December 31, 2019 and state net operating loss carryforwards spread across various jurisdictions with a combined total of approximately $7,057,000 as of December 31, 2019. The net operating loss carryforwards generated prior to January 1, 2018, if not used to reduce taxable income in future periods, will begin to expire in 2029, for both federal and state tax purposes. The net operating loss carryforward generated after December 31, 2018 will never expire for federal purposes but can only reduce 80% of taxable income in future years. Additionally, the Company also has tax credit carryforwards of approximately $1,177,000 as of December 31, 2019. These credit carryforwards, if not used in future periods, will begin to expire in 2029.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the future generation of taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and taxing strategies in making this assessment. Based on this assessment, management has established a full valuation allowance against all of the net deferred tax assets for each period, since it is more likely than not that all of the deferred tax assets will not be realized. The valuation allowance for the years ended December 31, 2019 and 2018 increased by approximately $1,140,000 and $995,000, respectively.

Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company's consolidated financial statements as of December 31, 2019 and 2018. The Company does not expect any significant changes in its unrecognized tax benefits within 12 months of the reporting date. The Company has U.S. federal and certain state tax returns subject to examination by tax authorities beginning with those filed for the year ended December 31, 2015. The Company's policy is to classify assessments, if any, for tax related interest as interest expense and penalties as general and administrative expenses in the consolidated statements of operations.