INCOME TAX

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

INCOME TAX

NOTE 9. INCOME TAX

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 not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax assets, projected future taxable income and tax planning strategies in making this assessment. After consideration of all the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore maintained a full valuation allowance. At June 30, 2023 and 2022, the valuation allowance was $399,855 and $48,598, respectively.

The Company’s effective tax rate from continuing operations was 0.0% and 0.0% for the three and six months ended June 30, 2023, respectively. The Company’s effective tax rate from continuing operations was 0.0% and 0.0% for the three and six months ended June 30, 2022, respectively. The Company’s effective tax rate differs from the statutory income tax rate of 21% primarily due to the change in fair value of warrant liabilities which are not recognized for tax purposes and the need for a valuation allowance against deferred tax assets.

The Company files income tax returns in the U.S. federal jurisdiction which remain open and subject to examination.