Income Taxes

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 10 – INCOME TAXES

The Company had no income tax expense due to operating losses incurred for the years ended December 31, 2019 and 2018. The Company accounts for income taxes in accordance with ASC 740, which requires that the tax benefit of net operating losses, 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 recent history of 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 full valuation allowance.

The Company's income tax expense for the periods ended December 31, 2019 and 2018 are summarized below:

	December 31, 2019			December 31, 2018
Current:
Federal	$	-		$	-
State		-			-
Total current	$	-		$	-
Deferred:
Federal	$	2,952,519		$	862,412
State		-			-
Change in valuation allowance		(2,952,519	)		(862,412	)
Total deferred		-			-
Income tax provision (benefit)	$	-		$	-

The Company's deferred tax assets are as follows:

	December 31, 2019			December 31, 2018
Deferred tax assets:
Net operating loss carryforwards	$	2,789,541		$	459,522
Research and development tax credit		532,711			59,270
Intangibles		105,580			68,003
Stock compensation		387,098			275,617
Total deferred tax assets		3,814,930			862,412
Valuation allowances		(3,814,930	)		(862,412	)
Net deferred tax assets	$	-		$	-

The effective tax rate of the Company's provision (benefit) for income taxes differs from the federal statutory rate as follows:

	December 31, 2019			December 31, 2018
Statutory rate		21.00	%		21.00	%
State rate		0.00	%		0.00	%
Permanent book/tax differences		(0.12	%)		(0.10	%)
Research and development credit		3.99	%		1.54	%
Changes in valuation allowance		(24.87	%)		(22.44	%)
Total		-			-

As of December 31, 2019 and 2018, the Company had gross federal income tax net operating loss ("NOL") carryforwards of $13,283,530 and $2,188,203, respectively, and federal research tax credits of $690,525 and $59,270, respectively.

Utilization of U.S. net operating losses and tax credit carryforwards may be limited by "ownership change" rules, as defined in Sections 382 and 383 of the Code. Similar rules may apply under state tax laws. The Company has not conducted a study to-date to assess whether a limitation would apply under Sections 382 and 383 of the Code as and when it starts utilizing its net operating losses and tax credits. The Company will continue to monitor activities in the future. In the event the Company previously experienced an ownership change, or should experience an ownership change in the future, the amount of net operating losses and research and development credit carryovers available in any taxable year could be limited and may expire unutilized.

Under the Code, the NOL can be carried forward indefinitely and can be used to offset up to 80% of taxable income for losses arising in tax years beginning after December 31, 2017. 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 asset will be realized. The ultimate realization of deferred tax assets is dependent upon the Company attaining future taxable income during periods in which those temporary differences become deductible.

Due to the uncertainty surrounding the realization of the benefits of its deferred assets, including NOL carryforwards, the Company has provided a 100% valuation allowance on its deferred tax assets at December 31, 2019.

The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740, Income Taxes. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As of December 31, 2019, the Company had a reserve for uncertain tax positions of $157,814, and no interest or penalties have been charged to the Company for the years ended December 31, 2019 and 2018. If incurred, the Company will classify any interest and penalties as a component of interest expense and operating expense, respectively. If recognized, $157,814 of the reserve for uncertain tax positions would favorably affect the Company's effective tax rate.

A reconciliation of the change in the unrecognized tax positions for the year ended December 31, 2019 is as follows:

	Federal and State
Balance at December 31, 2018	$	-
Additions for tax positions related to current year		157,814
Additions for tax positions related to prior years		-
Balance at December 31, 2019	$	157,814