v3.26.1
Note 7 - Income Taxes
 12 Months Ended
Dec. 31, 2025
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

7. INCOME TAXES

 

ASC 740, “Income Taxes” requires the recognition of deferred tax assets and liabilities for the expected future consequences of events that have been recognized in the financial statements or tax returns. Deferred income taxes reflect the net tax effects of (i) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and (ii) operating loss and tax credit carryforwards. The tax effects of significant items comprising the Company's deferred income taxes at December 31, 2025 and 2024 are as follows:

 

   

2025

    

2024

  
                 

Deferred tax asset - Operating loss carryforward

   $ 2,745,800     $ 1,362,812  
Deferred tax assets, gross     2,745,800       1,362,812  
Deferred Tax Assets, Valuation allowance     (2,745,800 )     (1,362,812 )
Gross deferred tax liability     -       -  

Less valuation allowance

     -       -  

Deferred income tax asset (liability) – net

     -       -  

 

In the opinion of management, based on the uncertainty that the Company will be able to generate taxable income in the future, the realization of the loss carryforwards is not likely and, accordingly, a valuation allowance has been recorded to offset such amount in its entirety.

 

The changes in the tax positions for the years ended December 31, 2025 and 2024 are as follows:

 

   

2025

    

2024

  

Balance at January 1

   $ 1,362,812     $ 816,430  

Additions based on tax positions related to current year

     84,083       178,832  

Additions for tax positions of prior years

     1,318,905       367,550  

Reductions for tax positions of prior years

     -       -  

Settlements

     -       -  

Balance at December 31

   $ 2,745,800     $ 1,362,812  

 

The Company is subject to taxation in the U.S. and the state of California. As of December 31, 2025, the tax years that remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2021 forward for Federal and 2020 forward for California (with limited exceptions).

 

At December 31, 2025, the Company had approximately of net operating loss carryforwards resulting in a Federal deferred tax asset of $1,932,366 and a state tax asset of $813,434. It is possible that subsequent ownership changes may limit the utilization of these tax attributes. Approximately $5,961,729 of the federal net operating loss carryforwards will expire in year 2025 through 2037. The remainder of the federal net operating loss carryforwards generated in 2018 and later have indefinite carryforward periods however are limited to 80% of taxable income in any given year. The California net operating loss carryforwards will expire in year 2028 through 2041. Given there is uncertainty as to whether the Company will be profitable in the future, the tax asset is not recognized during 2025.