11. INCOME TAXES

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

INCOME TAXES

11.     INCOME TAXES

The income tax provision (benefit) on the statements of operations was comprised of the following for the years ended December 31:

	2020			2019
Current income taxes	$	(23,298	)	$	–
Deferred income tax provision (benefit)		917,480			(909,976	)
Income tax provision (benefit)	$	894,182		$	(909,976	)

Deferred tax assets are comprised of the following at December 31:

	2020			2019
Deferred tax assets:
Net operating loss carryforward	$	4,261,552		$	837,327
Operating lease obligation		1,016,847			–
Stock-based compensation		650,737			497,760
Tax credits		491,261			175,859
Capital loss carryforward and other		270,551			5,825
		6,690,948			1,516,771
Deferred tax liabilities:
Amortization of intangibles assets		(548,149	)		(430,885	)
Depreciation of fixed assets		(435,218	)		(168,406	)
Right-of-use assets		(1,014,606	)		–
		(1,997,973	)		(599,291	)
Less valuation allowance		(4,692,975	)		–
Deferred tax asset, net	$	–			917,480

Deferred taxes arise from temporary differences in the recognition of certain expenses for tax and financial reporting purposes. At December 31, 2020, management determined that its more-likely-than-not that the Company’s net deferred tax assets would not be realized in the near future and placed a full valuation allowance on the deferred tax assets. At December 31, 2020 and 2019, net operating loss carryforwards were $18,164,542 and $3,987,271, respectively. $882,542 of the net operating loss carryforwards will expire from 2034 through 2037. At December 31, 2020 state net operating loss carryforwards range from $0 to $4,518,949 which expire from 2039 to 2040. During the year ended December 31, 2020, none of the net operating loss carryforward was utilized.

For the years ended December 31, 2020 and 2019, the reconciliation of the federal statutory tax rate to the benefit rate for income taxes is as follows:

	2020			2019
Statutory federal tax rate		21.0%			21.0%
Permanent differences – stock-based compensation		14.9			(33.9	)
Permanent differences – R&D tax credit		1.3			(0.9	)
Return-to-provision adjustments		2.8			–
Change in valuation allowance		(56.9	)		–
Change in carryovers and tax attributes		6.1			(0.1	)
Effective tax rate		(10.8	)%		(13.9	)%