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

NOTE 10 - INCOME TAXES

 

For financial reporting purposes, income before income taxes includes the following components:

 

   Years Ended December 31 
   2025   2024 
Loss before income taxes:        
United States  $(7,452,574)  $(8,993,799)
Foreign   
-
    
-
 
Loss before income taxes:  $(7,452,574)  $(8,993,799)

 

The expense for income taxes consists of:

 

   Year Ended December 31, 
   2025   2024 
Current income tax provision        
Federal  $
             -
   $
             -
 
State   14,853    9,946 
Foreign   
-
    
-
 
    14,853    9,946 
Deferred income tax (benefit) expense          
Federal   
-
    
-
 
State   
-
    
-
 
Foreign   
-
    
-
 
    
-
    
-
 
           
Total income tax (benefit) provision  $14,853   $9,946 

 

Reconciliation between the effective tax rate on income from continuing operations and the statutory tax rate is as follows:

 

    Year Ended December 31,  
    2025     2024  
    $     %     $     %  
Provision at Federal Statutory Rate   $ (1,565,040 )     21.00 %   $ (1,888,698 )     21.00 %
State and local income tax, net of federal income tax effect*     14,853       (0.20 )%     10,558       (0.12 )%
Foreign tax effects     -       0.00 %     -       0.00 %
Effect of changes in tax laws or rates enacted in the current period     -       0.00 %     -       0.00 %
Effect of cross-border tax laws     -       0.00 %     -       0.00 %
Tax credits     -       0.00 %     -       0.00 %
Changes in valuation allowance     1,288,973       (17.30 )%     (1,337,613 )     14.87 %
Nontaxable or nondeductible items                                
Stock-Based Compensation     327,069       (4.39 )%     232,126       (2.58 )%
Stock Issuance Costs     -       0.00 %     319,908       (3.56 )%
Other Nontaxable or nondeductible items     4,340       (0.06 )%     3,121       (0.03 )%
Changes in unrecognized tax benefits     -       0.00 %     -       0.00 %
Other                                
Attribute Expirations     -       0.00 %     2,473,630       (27.50 )%
Prior Period True Ups     (55,342 )     0.74 %     196,914       (2.19 )%
Provision for Income Taxes   $ 14,853       (0.21 )%   $ 9,946       (0.11 )%

 

*State and local income tax expense was insignificant for the period due to a full valuation allowance recorded against state deferred tax assets. As a result, state income taxes did not have a material impact on the Company’s effective tax rate.

 

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, Management believes that significant uncertainty exists with respect to future realization of all of the deferred tax assets and has therefore established a full valuation allowance. The valuation allowance increased by $1.8 million for the year ended December 31, 2025, compared to the decrease of $1.2 million for the year ended December 31, 2024.

The significant components of the Company’s deferred tax assets and liabilities are as follows:

 

   Year Ended December 31, 
   2025   2024 
Deferred tax assets:        
Net operating loss carryforward  $19,108,255   $17,061,064 
Tax credits   205,028    205,028 
Lease liabilities   13,976    14,404 
Accruals and reserves   160,270    148,784 
Capitalized Research Costs   486,900    438,127 
Taxable Goodwill   621,194    871,350 
Intangible assets   608,149    556,997 
Stock Compensation   266,181    275,637 
Fixed assets   24,963    24,461 
Other   4,179    4,943 
Total deferred tax assets before valuation allowance:   21,499,095    19,600,795 
Valuation allowance   (21,406,326)   (19,587,280)
Deferred tax assets, net of valuation allowance   92,769    13,515 
           
Deferred tax liabilities:          
Right-of-use assets   (92,769)   (13,515)
Total deferred tax liabilities   (92,769)   (13,515)
Net deferred tax liability  $
-
   $
-
 

 

As of December 31, 2025, the Company had US federal and state net operating loss (“NOLs”) carryovers of $72.7 million and $86.3 million, respectively. Federal and state NOLs generated through December 31, 2017 are available to offset future taxable income, which expire beginning in 2032. Federal NOLs generated for years starting after December 31, 2017 are available to offset future taxable income indefinitely. State NOLs generated for years starting after December 31, 2017 that are available to offset future taxable income indefinitely vary by state. In addition, the Company had tax credit carryforwards of $0.2 million at December 31, 2025 that will be available to reduce future tax liabilities. The tax credit carryforwards will begin to expire beginning in 2032.

 

In accordance with Section 382 of the Internal Revenue Code, deductibility of the Company’s NOLs may be subject to an annual limitation in the event of a change of control. The Company has not determined whether a change of control has occurred as of December 31, 2025 with respect to the NOLs and therefore no limitation under Section 382 has been computed. Management will review for such limitations before any of the LogicMark NOLs are utilized against future taxable income.

 

The Company has no material uncertain tax positions for any of the reporting periods presented. No interest or penalty expense was recorded during the year or has been accrued as of December 31, 2025 or 2024. The Company does not expect any material changes to any uncertain tax positions in the next twelve months. The Company has filed all of its tax returns for all prior periods through December 31, 2024, and intends to timely file the income tax returns for the period ending December 31, 2025.

 

The Company is subject to taxation in the United States and various states. As of December 31, 2025, the Company is not under examination by any taxing authority, however, all of the Company’s U.S. and state income tax returns remain open to examination.