General form of registration statement for all companies including face-amount certificate companies

Income Taxes

v3.22.4
Income Taxes
6 Months Ended 9 Months Ended 12 Months Ended
Jun. 30, 2022
Sep. 30, 2022
Dec. 31, 2021
Income Taxes [Abstract]      
Income Taxes  

8. Income Taxes

Income tax provisions for interim periods are generally based on an estimated annual effective income tax rate calculated separately from the effect of significant, infrequent, or unusual items related specifically to interim periods. No income tax expense was recognized for the three or nine months ended September 30, 2022 or 2021. The Company has a full valuation allowance against its deferred tax assets as of September 30, 2022 and December 31, 2021, respectively.

8. Income Taxes

No amounts were recorded for income tax expense during the years ended December 31, 2021 or 2020. A reconciliation of the expected statutory federal tax and the total income tax expense was as follows:

 

Year Ended
December 31,

   

2021

 

2020

Federal statutory rate

 

$

(3,176,802

)

 

$

(1,510,748

)

State income taxes, net

 

 

 

 

 

 

Change in valuation allowance

 

 

3,783,112

 

 

 

2,218,615

 

PPP Loans forgiveness

 

 

(331,485

)

 

 

(331,485

)

Research & development tax credit

 

 

(282,774

)

 

 

(379,073

)

Other, net

 

 

7,949

 

 

 

2,691

 

Total income tax expense

 

$

 

 

$

 

The tax effect of temporary differences that gave rise to significant components of deferred tax assets and liabilities consisted of the following:

 

December 31,

   

2021

 

2020

Deferred tax assets:

 

 

 

 

 

 

 

 

Net operating loss carryforwards

 

$

6,645,145

 

 

$

5,261,805

 

R&D tax credit carryforward

 

 

1,616,415

 

 

 

1,333,641

 

Charitable contributions carryover

 

 

20,469

 

 

 

25,568

 

Contract liabilities

 

 

61,696

 

 

 

 

Convertible notes

 

 

1,991,664

 

 

 

 

Stock-based compensation

 

 

318,322

 

 

 

228,333

 

Total deferred tax assets

 

 

10,653,711

 

 

 

6,849,347

 

   

 

 

 

 

 

 

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Contract assets

 

 

(18,769

)

 

 

 

Depreciation

 

 

(17,347

)

 

 

(14,864

)

Net deferred tax asset before valuation allowance

 

 

10,617,595

 

 

 

6,834,483

 

Valuation allowance

 

 

(10,617,595

)

 

 

(6,834,483

)

Net deferred tax asset

 

$

 

 

$

 

The Company has federal net operating loss carryforwards of approximately $31.6 million at December 31, 2021, of which about $646,000 begin to expire in 2035 and the remainder have no expiration. The Company has recorded a full valuation allowance against its net deferred tax assets due to recurring net losses.

CleanTech Acquisition Corp [Member]      
Income Taxes [Abstract]      
Income Taxes

NOTE 9. INCOME TAXES

The Company’s effective tax rate for the three and six months ended June 30, 2022 was (1.6)% and 1.1%, respectively. The effective tax rate for the three and six months ended June 30, 2021 was 0.0%. The Company’s effective tax rate differs from the statutory income tax rate of 21% primarily due to the recognition of gains or losses from the changes in the fair value of warrant liabilities and the convertible promissory note, which are not recognized for tax purposes, and recording a full valuation allowance on deferred tax assets. The Company has historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full fiscal year to income or loss for the reporting period. The Company has used a discrete effective tax rate method to calculate taxes for the three and six months ended June 30, 2022. The Company believes that, at this time, the use of the discrete method for the three and six months ended June 30, 2022 is more appropriate than the estimated annual effective tax rate method as the estimated annual effective tax rate method is not reliable due to a high degree of uncertainty in estimating annual pretax earnings.

 

NOTE 9. INCOME TAX

The Company’s net deferred tax assets (liabilities) as of December 31, 2021 is as follows:

Deferred tax assets:

 

 

 

 

Start-up costs

 

$

252,290

 

Net operating loss carryforwards

 

 

20,412

 

Total deferred tax assets

 

 

272,702

 

Valuation allowance

 

 

(271,562

)

Deferred tax liabilities:

 

 

 

 

Unrealized gain on investments

 

 

(1,140

)

Total deferred tax liabilities

 

 

(1,140

)

Deferred tax assets, net of allowance

 

$

 

The income tax provision for the year ended December 31, 2021 consists of the following:

Federal

 

 

 

 

Current

 

$

 

Deferred

 

 

(271,562

)

   

 

 

 

State

 

 

 

 

Current

 

 

 

Deferred

 

 

 

Change in valuation allowance

 

 

271,562

 

Income tax provision

 

$

 

As of December 31, 2021, the Company has available U.S. federal operating loss carry forwards of approximately $990,823 that may be carried forward indefinitely.

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 established a full valuation allowance. For the year ended December 31, 2021, the valuation allowance was $271,562.

A reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2021 is as follows:

Statutory federal income tax rate

 

21.0

%

State taxes, net of federal tax benefit

 

0.0

%

Change in fair value of derivative warrant liabilities

 

61.1

%

Non-deductible transaction costs

 

(8.8

)%

Change in valuation allowance

 

(73.3

)%

Income tax provision

 

0.0

%

Deferred tax assets were deemed to be de minimis as of December 31, 2020.