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

 NOTE 23 – INCOME TAXES

 

Prior to the Share Exchange effective July 1, 2025, the Company was taxed in the US as a partnership for federal and state tax purposes with all tax benefits or liabilities of its operations passing through to its members. Accordingly, the Company itself did not recognize any tax benefits or liabilities in its financial statements in respect of its operations. Subsequent to the Share Exchange, effective July 1, 2025, the Company is a taxable corporation.

 

During the years ended December 31, 2025 and 2024, the Company’s net loss before income taxes of $29,460,935 and $3,621,948, respectively, includes a US component of loss from operations before income taxes of $27,819,707 and $3,081,772, respectively. It also includes a foreign component comprised of loss from operations before income taxes of $1,641,228 and $540,176 respectively.

 

A reconciliation of the federal statutory rate of 21% to the effective tax rate for income from continuing operations before income taxes is as follows in accordance with the prospective adoption of ASU 2023-09, which became effective in the year ended December 31, 2025.

 

 

Rate Reconciliation     Rate 
Rate Reconciliation  Tax Effected   Rate 
         
U.S. Federal Statutory Income Tax  $(6,186,797)   21.00%
State Tax   -    0.00%
Foreign Tax Effects          
Foreign Rate Differential   111,859    (0.38)%
Change In Valuation Allowance   232,799    (0.79)%
Nontaxable and Nondeductible Items:          
Transaction Costs   780,586    (2.65)%
Other   771    0.00%
Other Reconciling Items:          
Partnership Rate Differential   329,636    (1.12)%
Other Deferred Adjustment   (211,384)   0.72%
Change In Valuation Allowance   4,942,530    (16.78)%
           
Effective Tax Rate  $-   -%

 

The tax effects of the temporary differences between financial statement income and taxable income are recognized as a deferred tax asset and liabilities. Significant components of the deferred tax asset and liability as of December 31, 2025 and 2024 are set out below.

 

  

Deferred Tax Assets  2025 
     
174 Costs  $198,055 
Stock Compensation   726,151 
Lease Liability   33,839 
Debt Issuance Costs   526,365 
Depletion   

919,816

 
Net Operating Losses   8,380,015 
Total Assets   10,784,241 
Less Valuation Allowance   (10,752,701)
Net Assets   31,540
      
Deferred Tax Liabilities     
Right of Use Asset   (31,540)
Total Liabilities   (31,540)
      
Total at December 31, 2025  $- 

 

As of December 31, 2025, the Company had federal net operating loss carryforwards of $36,715,325 and foreign net operating loss carryforwards of $5,009,092. There was no benefit or expense for income taxes recorded on NOLs during the year ended December 31, 2025, due to the valuation allowance. The Company’s federal net operating loss carryforwards will begin to expire in the tax years ending December 31, 2032, and the foreign losses can be carried forward indefinitely.

 

The Company establishes a valuation allowance, if based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Tax benefits of operating losses and other deferred tax assets are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and other circumstances. As a result of this evaluation, the Company has established a valuation allowance against its net deferred tax asset.

 

As of December 31, 2025, the Company did not have any gross unrecognized tax benefits which would have an impact on the Company’s effective income tax rate, if recognized.