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

9. Income taxes

 

During the years ended years ended December 31, 2025 and 2024, the Company recorded a provision for income tax expense (benefit) of $3,089 and $0.7 million, respectively. The Company's loss before income taxes in the United States ("U.S.") for the years ended December 31, 2025 and 2024 was $21.2 million and $15.6 million, respectively. The Company has no foreign operations.

 

The Company adopted ASU 2023-09 in the 2025 reporting period. A reconciliation of the U.S. federal statutory income tax rate to the Company's effective tax rate pursuant to the disclosure requirements of ASU 2023-09 is as follows (in millions, except for percentages):

 

 

As of December 31,

 

 

 

 

2025

 

 

 

2024

 

 

U.S. Statutory Tax Rate

 

$

(4,456,834

)

 

 

21.00

 

%

 

$

(3,276,226

)

 

 

21.00

 

%

State and Local Income Taxes, Net of Federal Income Tax Effect

 

 

36,708

 

 

 

(0.17

)

 

 

 

(18,533

)

 

 

0.12

 

 

Tax Credits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development credits

 

 

(1,411,861

)

 

 

6.65

 

 

 

 

(459,249

)

 

 

2.94

 

 

Change in Valuation Allowances

 

 

5,184,024

 

 

 

(24.43

)

 

 

 

2,503,957

 

 

 

(16.05

)

 

Nontaxable or Nondeductible Items

 

 

103,368

 

 

 

(0.49

)

 

 

 

100,882

 

 

 

(0.65

)

 

Other Adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision True-up

 

 

7,607

 

 

 

(0.04

)

 

 

 

214,707

 

 

 

(1.37

)

 

Deferred Only Adjustment

 

 

540,852

 

 

 

(2.55

)

 

 

 

213,818

 

 

 

(1.35

)

 

Other

 

 

(775

)

 

 

-

 

 

 

 

357

 

 

 

-

 

 

Actual income tax expense (benefit) effective tax rate

 

$

3,089

 

 

 

(0.03

)

%

 

$

(720,287

)

 

 

4.64

 

%

 

 

Income tax expense for the years ended December 31, 2025 and 2024 consists of the following:

 

 

As of December 31,

 

 

 

2025

 

 

2024

 

 

U.S. federal

 

 

 

 

 

 

 

Current

 

$

-

 

 

$

(718,582

)

 

Deferred

 

 

-

 

 

 

-

 

 

Total U.S. federal

 

 

-

 

 

 

(718,582

)

 

State and local

 

 

 

 

 

 

 

Current

 

 

3,089

 

 

 

(1,705

)

 

Deferred

 

 

-

 

 

 

-

 

 

Total State and local

 

 

3,089

 

 

 

(1,705

)

 

Income tax expense (benefit)

 

$

3,089

 

 

$

(720,287

)

 

 

 

 

 

 

 

 

 

 

The following table presents income taxes paid (net of refunds received) during the years ended December 31, 2025 by jurisdiction:

 

 

Years Ended December 31,

 

 

2025

 

 

2024

 

U.S. federal

 

$

(725,000

)

 

$

725,000

 

Florida

 

 

(7,813

)

 

 

7,813

 

Texas

 

 

2,232

 

 

 

1,332

 

 

 

$

(730,581

)

 

$

734,145

 

 

 

 

 

 

 

 

 

 

Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect for years in which differences are expected to reverse.

 

Significant components of the Company's deferred tax assets consisted of the following:

 

 

As of December 31,

 

Deferred tax assets

 

2025

 

 

2024

 

Startup costs

 

$

1,538,037

 

 

$

1,673,301

 

Section 174 capitalization

 

 

2,578,643

 

 

 

3,641,638

 

Share-based compensation

 

 

645,393

 

 

 

462,487

 

Net operating losses

 

 

5,976,009

 

 

 

1,351,896

 

Accrued expenses and other

 

 

363,520

 

 

 

222,198

 

Capitalized license fees

 

 

38,588

 

 

 

41,981

 

Credit carryforwards

 

 

1,901,146

 

 

 

489,284

 

Deferred revenue

 

 

271,294

 

 

 

250,363

 

Fixed assets

 

 

469

 

 

 

(4,074

)

Valuation allowance

 

 

(13,313,099

)

 

 

(8,129,074

)

Deferred tax assets, net of valuation allowance

 

$

-

 

 

$

-

 

 

 

 

 

 

 

 

 

As of December 31, 2025 and 2024, the Company had net operating loss carryforwards for federal income tax purposes of approximately $28.5 million and $6.4 million, respectively. Net operating losses are available to offset future federal taxable income. Generally, net operating losses generated after 2017 may be carried forward indefinitely but limited to 80% of federal taxable income each year. As of December 31, 2025, the Company has federal and Texas research and development credit of approximately $1.9 million and $21,524, respectively. The Texas research and development credit will begin to expire in 2041 and the federal will begin to expire in 2043.

 

In assessing the recoverability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has determined that it is more likely than not that certain future tax benefits may not be realized as a result of current and future income. Accordingly, a valuation allowance has been recorded against all of the Company’s deferred tax assets.

 

Net operating loss and tax credit carry-forwards are subject to review and possible adjustment by the Internal Revenue Service (“IRS”) and are subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50% as defined under Sections 382 and 383 in the Internal Revenue Code. Based upon our analysis, we have determined that such an ownership change has occurred during the year ended December 31, 2023. As a result, a Section 382 limitation will limit the Company's utilization of NOLs and other tax attributes that existed at the date of the change in ownership.

 

The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense. The Company had no interest or penalties related to uncertain tax positions. The Company’s tax years from December 31, 2022, through the present are subject to examination by federal and state taxing authorities. To the extent utilized in future years’ tax returns, net operating loss carryforwards as of December 31, 2025 will remain subject to examination until utilized. The Company has not been informed by any tax authorities for any jurisdiction that any of its tax years is under examination as of December 31, 2025.