Annual report pursuant to Section 13 and 15(d)

Disclosure of Prior Period Financial Statement Error

Disclosure of Prior Period Financial Statement Error

12 Months Ended

Dec. 31, 2022

Disclosure of Prior Period Financial Statement Error

Disclosure of Prior Period Financial Statement Error

Note 15 – Disclosure of Prior Period Financial Statement Error

The Company revised certain previously issued disclosures related to the components of its deferred tax assets and liabilities and valuation allowance as of December 31, 2021. Additionally, the Company has revised the reconciliation of its income tax rate computed using the federal statutory rate for the year ended December 31, 2021. Since the Company provided a full valuation allowance on its net deferred tax assets, there was no impact to the Balance Sheet, Statement of Operations, Statement of Cash Flows or Statement of Stockholders’ Equity as of and for the year ended December 31, 2021.

The Company corrected its net operating loss carryforward and other deferred tax assets as of December 31, 2021, based on further analysis. The Company further reviewed its disclosure of the rate reconciliation and valuation allowance of its deferred tax assets. The below table summarizes the revisions to the reconciliation of the Company’s income tax rate computed using the federal statutory rate compared with the Company’s actual income tax rate for the year ended December 31, 2021:

							For the
							Year Ended
							December 31,
	2021			Adjustment			2021, Adjusted
U.S. federal statutory rate		21.0	%		0.0	%		21.0	%
State taxes		4.3	%		(6.8	)%		(2.5	)%
Deferred tax asset adjustments		33.5	%		(25.1	)%		8.4	%
Non-deductible amortization of debt discount		0.0	%		(13.8	)%		(13.8	)%
Non-taxable change in profit share liability		0.0	%		(3.1	)%		(3.1	)%
Change in valuation allowance		(63.6	)%		53.0	%		(10.6	)%
Income tax provision		(4.8	)%		4.2	%		(0.6	)%

The below table summarizes the revisions to the deferred tax assets and liabilities as of December 31, 2021:

							2021
	2021			Adjustment			Adjusted
Deferred tax assets:
Net operating loss carryforwards	$	9,312,000		$	(2,623,000	)	$	6,689,000
Stock based compensation		1,762,000			110,000			1,872,000
Other		143,000			(13,000	)		130,000
Total deferred tax assets		11,217,000			(2,526,000	)		8,691,000
Deferred tax liabilities:
Property and equipment		(41,000	)		41,000			-
Intangible assets		(76,000	)		-			(76,000	)
Total deferred tax liabilities		(117,000	)		41,000			(76,000	)

Valuation allowance		(11,100,000	)		2,485,000			(8,615,000	)

Net deferred tax asset	$	-			-			-