|9 Months Ended|
Sep. 30, 2021
|Income Tax Disclosure [Abstract]|
NOTE 13 – INCOME TAXES
The Company had a net deferred tax asset of $16,655,023 as of December 31, 2020, including a tax benefit from net operating loss carry-forwards of $14,064,563. A valuation allowance of $16,655,023 was provided against this asset resulting in deferred assets, net of valuation allowance of $0.
In assessing the realizability of deferred tax assets, including the net operating loss carry forwards, the Company assesses the positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize its existing deferred tax assets. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period when those temporary differences become deductible. Based on its assessment, the Company has provided a full valuation allowance against its deferred tax assets since their future utilization remains uncertain at this time.
In accordance with Section 382 of the Internal Revenue Code, the usage of the Company’s net operating loss carry forwards could be limited in the event a change of control has occurred.
Given the uncertainties involved, the Company has not released any valuation allowance to offset the deferred tax liability of $12,760,200 created on the acquisition of American Robotics on August 5, 2021.
The Company is carrying out a study to determine the realizability of its net operating loss carryforwards under Section 382 and based on the results of that study will determine if the deferred tax liability can be partially or fully offset by releasing the valuation allowance. Any such release would be a credit to the income statement.
American Robotics also had net operating loss carryforwards against which a full valuation allowance had been recorded. The Company is also carrying out a study on the realizability of these assets under Section 382. To the extent this valuation allowance can be partially or fully released, it will reduce the deferred tax liability recorded on the acquisition of American Robotics with the offset being reduction in the estimated goodwill on acquisition.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef