Income Taxes

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Note 9 - Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Deferred tax assets are required to be reduced by a valuation allowance to the extent that, based on the weight of available evidence, it is more likely than not that the deferred tax assets will not be realized.

Deferred Taxes

Components of income tax benefit for the years ended December 31, 2019 and 2018 are as follows:

	December 31,
	2019		2018
Current tax expense (benefit)	$	-	$	-
		-		-
Deferred tax expense (benefit)	$	-	$	-
		-		-
Total provision for income taxes	$	-	$	-

Temporary differences between financial statement carrying amount and tax basis of assets and liabilities that give rise to significant portions of the deferred tax assets and liabilities at December 31, 2019 and 2018 are as follows:

	December 31,
	2019			2018
Deferred tax assets:
Net operating loss	$	2,723,750		$	1,944,504
Intangible assets		21,853			16,176
Other		12,465			134,324
Stock options		109,372			-
Total deferred income tax assets		2,867,440			2,095,004
Deferred income tax liabilities:
Depreciation		(7,633	)		(78,621	)
Total deferred income tax liabilities		(7,633	)		(78,621	)
Valuation allowance		(2,859,807	)		(2,016,383	)
Net deferred income tax asset	$	—		$	—

The Company had a net operating loss carryforward of approximately $10,700,000 as of December 31, 2019. Net deferred tax assets are mainly comprised of temporary differences between financial statement carrying amount and tax basis of assets and liabilities.

FASB ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. At December 31, 2019 and 2018, the Company had a full valuation allowance on its net deferred income tax asset.

In addition, the Company performed a comprehensive review of its uncertain tax positions and determined that no adjustments were necessary relating to unrecognized tax benefits at December 31, 2019 and 2018. The Company's federal and state income tax returns are subject to examination by taxing authorities for three years after the returns are filed, and the Company's federal and state income tax returns for 2018 and 2017 remain open to examination.

The reconciliation of income tax benefit is computed at the U.S. federal statutory rate as follows:

	December 31,
	2019			2018
U.S. federal statutory tax rate		21.00	%		21.00	%
Federal minimum taxes		0.00	%		0.00	%
Permanent differences		-0.29	%		-0.04	%
Change in effective rate		0.00	%		0.00	%
Change in valuation allowance		-20.93	%		-31.07	%
State tax effect, net of federal benefit		4.29	%		4.34	%
Prior tax adjustments		-4.07	%		5.77	%
Other items		0.00	%		0.00	%
Total		0.00	%		0.00	%