Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 16

Income Taxes:

The Company has Swiss tax loss carryforwards of $23.6 million as of December 31, 2021 (December 31, 2020: $15.5 million) of which $11.5 million will expire within the next five years, and $12.1 million will expire between 2027 - 2028.

The significant components of net deferred taxes as of December 31, 2021 and 2020 are shown in the following table:

	2021			2020
Deferred tax assets:
Net benefit from tax loss carryforwards	$	2,504,647		$	1,393,996
Deferred revenues		264,997			224,997
Other, net		(24,086	)		6,951
Valuation allowance		(2,745,558	)		(1,625,944	)
Net deferred taxes	$	-		$	-

The Company recorded a valuation allowance in 2021 and 2020 to reduce the net deferred taxes, as the Company deemed it to be more likely than not that the future deferred tax assets would not be realized in the future based on the lack of sufficient positive evidence in the jurisdictions related to the realization of the deferred tax assets.

The effective tax rate was 0% for the years ended December 31, 2021, 2020 and 2019. The following table shows the income taxes in 2021, 2020 and 2019:

	2021			2020			2019
Current tax	$	-		$	-		$	-
Deferred income tax (benefit)		(1,119,614	)		(384,488	)		(325,572	)
		(1,119,614	)		(384,488	)		(325,572	)
Change in valuation allowance		1,119,614			384,488			325,572
Total income tax expense	$	-		$	-		$	-

The Company files income tax returns in Switzerland. The Company’s income tax position in Switzerland is finally assessed up to the year ended December 31, 2019, so the years ended December 31, 2020 and 2021 are open for examination. Currently the Company does not have any open tax assessments. The following table shows the reconciliation between expected and effective tax rate:

	2021			2020			2019
Statutory tax rate		10.6	%		9.0	%		9.0	%
Effect of permanent differences		(3.6	)%		3.9	%		(2.3	)%
Change in valuation allowance on deferred tax assets		(7.0	)%		(12.9	)%		(6.7	)%
Effective tax rate		0.0	%		0.0	%		0.0	%

The Company had generated approximately $9,700,000 of net operating losses (“NOLs”) prior to the Merger, in which the Company’s preliminary analysis indicates that such NOLs would not be subject to significant limitations pursuant to applicable income tax regulations. The permanent differences relate to the conversion to U.S. GAAP from Swiss accounting, mainly in the areas of debt, intangible amortization and deferring financing costs.

As of December 31, 2021 and 2020, there were no unrecognized tax benefits. If such matters were to arise, the Company would recognize interest and penalties related to income tax matters in income tax expense. The Company did not incur any material interest or penalties in connection with income taxes during the years ended December 31, 2021 and 2020.