Note 14 - Income Taxes |
6 Months Ended |
|---|---|
Jun. 30, 2025 | |
| Notes to Financial Statements | |
| Income Tax Disclosure [Text Block] |
NOTE 14 – INCOME TAXES
Income taxes for the three months ended June 30, 2025 and June 30, 2024 have been calculated based on an estimated annual effective tax rate. For the three months ended June 30, 2025, the Company recorded a tax expense of approximately $426,000. The Company’s income tax expense for the three months ended June 30, 2025 was related to current year projected income that is not eligible to be offset with prior year tax attribute carryovers. The Company’s income tax expense for the three months ended June 30, 2024 was determined not to be significant and therefore no expense was recorded in the Company's condensed consolidated financial statements and related disclosures.
Income tax expense is comprised of domestic (US federal and state) income taxes at the applicable tax rates, adjusted for non-deductible expenses, stock compensation expenses, and other permanent differences. Our income tax provision may be affected by changes to our estimates. However, due to the full valuation allowance on our deferred tax assets, the net impact to our overall income tax expense is limited.
For the six months ended June 30, 2025, we recorded a tax expense of approximately $426,000. The Company’s income tax expense for the six months ended June 30, 2025 was related to current year projected income that is not eligible to be offset with prior year tax attribute carryovers. For the six months ended June 30, 2024, our tax expense was determined not to be significant and therefore wasn't included in the Company's condensed financial statements and related disclosures.
Under Sections 382 and 383 of the Code, if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percentage points (by value) in the ownership of its equity over a three-year period), the corporation’s ability to use its pre-change tax attributes to offset its post change income may be limited. We may have experienced such ownership changes in the past, and we may experience ownership changes in the future or subsequent shifts in our stock ownership, many of which are outside our control. As of December 31, 2024, we had state net operating losses ("NOLs") of approximately $13.8 million and federal NOLs of approximately $10.9 million. The federal NOLs do not expire but the state NOLs expire if not utilized before 2043. Our ability to utilize these NOLs and tax credit carryforwards may be limited by any “ownership changes” as described above that have occurred in prior years or that may occur in the future. If we undergo future ownership changes, many of which may be outside of our control, our ability to utilize our NOLs and tax credit carryforwards could be further limited by Sections 382 and 383 of the Code. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise become unavailable to offset future income tax liabilities. Additionally, our NOLs and tax credit carryforwards could be limited under state law. For these reasons, even if we attain profitability, we may be unable to use a material portion of our NOLs and other tax attributes.
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