Annual report [Section 13 and 15(d), not S-K Item 405]

Income Taxes

v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Taxes [Abstract]  
Income Taxes

Note 11. Income Taxes

 

The significant items comprising the Company’s net deferred taxes as of December 31, 2025 and 2024 are as follows:

 

    As of December 31,  
    2025     2024  
Net operating loss   $ 9,493,537     $ 9,042,902  
Stock options and compensation     2,426,677       2,440,539  
Deferred revenue     274,366       318,610  
Other    

1,185,473

       576,224  
Valuation allowance     (13,380,053 )     (12,378,275 )
Total deferred tax asset     -       -  
                 
Basis difference fixed assets     -       -  
Total deferred tax liability     -       -  
                 
Net deferred tax asset (liability)   $ -     $ -  

 

The components of the provision for (benefit from) income taxes consist of the following:

 

    As of December 31,  
    2025     2024  
Current tax:            
Federal   $ -     $ -  
State     -       -  
Total   $ -     $ -  
                 
Deferred tax:                
Federal   $ (928,450 )   $ (233,463 )
State     (73,328 )     (18,344 )
Less: change in valuation allowance     1,001,778       251,807  
      -       -  
Total   $ -     $ -  

 

The provision for (benefit from) income taxes varies from the amount computed by applying the statutory rate for reasons summarized below:

 

    As of December 31,
2025		     As of December 31,
2024		  
Net loss before tax per financial statements   $ (4,444,109 )           $ (1,136,225 )        
                                 
Statutory rate     (933,263 )     21.00 %     (238,607 )     21.00 %
State tax rate     (73,328 )     1.65 %     (18,748 )     1.65 %
Permanent items     4,813       (0.11 )%     5,548       0.49 %
Rate change     -       0.00 %     -       0.00 %
Change in valuation allowance     1,001,778       (22.54 )%     251,807       (22.16 )%
    $ -       0.00 %   $ -       0.00 %

 

As of December 31, 2025 and 2024, the Company had federal net operating loss carryforwards of approximately $41.9 million and $38.8 million, respectively, available to offset future taxable income. As of December 31, 2025 and 2024, the Company had state loss carry-forwards of approximately $20.3 million and $19.3 million, respectively. Future utilization of net operating losses may be limited due to potential ownership changes under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). The federal net operating loss carryforwards can be carried forward indefinitely and state loss carryforwards begin to expire in 2039.

 

The valuation allowance as of December 31, 2025 and 2024 was $13,380,053 and $12,378,275, respectively. The net change in valuation allowance for the years ended December 31, 2025 and 2024 was an increase of $1,001,778 and $251,807, respectively. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on consideration of these items, management has determined that enough uncertainty exists relative to the realization of the deferred income tax asset balances to warrant the application of a full valuation allowance as of December 31, 2025 and 2024.

 

As of December 31, 2025, the Company has not filed federal or state tax returns for the years beginning 2020 through 2025. The Company plans to work with external tax advisors to prepare and submit these returns. The company has evaluated the potential tax exposure and believes there to be no liability due to the Company’s sustained losses. However, the final tax liability could differ from the amounts currently recorded. The Company does not believe the outcome will have a material adverse effect on its overall financial position.

 

The Company had no unrecognized tax benefits during 2025 or 2024. By statute, all tax years are open to examination by the major taxing jurisdictions to which the Company is subject.