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

Income Taxes

v3.25.1
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Taxes [Abstract]  
Income Taxes

Note 11. Income Taxes

 

By virtue of a merger of the limited liability company into a corporation, the Company became a corporation during 2018.

 

The significant items comprising the Company’s net deferred taxes as of December 31, 2024 and 2023 are as follows:

 

    As of December 31,  
    2024     2023  
Net operating loss   $ 9,042,902     $ 8,790,076  
Stock options and compensation     2,440,539       2,440,539  
Deferred revenue     318,610       324,159  
Other     576,224       571,694  
Valuation allowance     (12,378,275 )     (12,126,468 )
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,  
    2024     2023  
Current tax:            
Federal   $
-
     $
-
  
State    
-
      
-
  
Total   $
-
     $
-
  
                 
Deferred tax:                
Federal   $ (233,463 )   $ (915,543 )
State     (18,344 )     (71,935 )
Less: change in valuation allowance     251,807       987,478  
     
-
      
-
  
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,
2024		     As of December 31,
2023		  
Net loss before tax per financial statements   $ (1,136,225 )           $ (3,981,144 )        
                                 
Statutory rate     (238,607 )     21.00 %     (836,040 )     21.00 %
State tax rate     (18,748 )     1.65 %     (65,689 )     1.65 %
Permanent items     5,548       (0.49 )%     (85,749 )     2.15 %
Rate change    
 
       0.00 %    
 
       0.00 %
Change in valuation allowance     251,807       (22.16 )%     987,478       (24.80 )%
    $
-
       0.00 %   $
-
       0.00 %

 

As of December 31, 2024 and 2023, the Company had federal net operating loss carryforwards of approximately $39.9 million and $38.8 million, respectively, available to offset future taxable income. As of December 31, 2024 and 2023, the Company had state loss carry-forwards of approximately $19.3 million and $18.2 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, 2024 and 2023 was $12,378,275 and $12,126,468, respectively. The net change in valuation allowance for the years ended December 31, 2024 and 2023 was an increase of $251,807 and $987,478, 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, 2024 and 2023.

The Company had no unrecognized tax benefits during 2024 or 2023. By statute, all tax years are open to examination by the major taxing jurisdictions to which the Company is subject.