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

NOTE 16 – INCOME TAXES

 

Income (loss) from continuing operations before income taxes for the years ended December 31, 2025 and 2024 consisted entirely of domestic (U.S.) activity as follows:

 

  

Year Ended

December 31, 2025

  

Year Ended

December 31, 2024

 
United States  $(43,182,487)  $(9,600,194)

 

The benefit (provision) for income taxes for the years ended December 31, 2025 and 2024 consisted of the following:

 

  

Year Ended

December 31, 2025

  

Year Ended

December 31, 2024

 
Current:          
Federal  $—   $— 
State   —    — 
Total current  $—   $— 
Deferred:          
Federal  $1,994,878   $534,396 
State   —    — 
Total deferred  $1,994,878   $534,396 
Total income tax benefit (provision)  $1,994,878   $534,396 

 

 

A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rate for the years ended December 31, 2025 and 2024 is as follows:

 

 SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION

  

Year Ended

December 31, 2025

  

Year Ended

December 31, 2024

 
Tax at U.S. federal statutory rate (21%)  $(9,068,322)  $(2,016,041)
State income taxes, net of federal benefit   (714,994)   (159,371)
Non-deductible stock-based compensation (ISO)   1,339,586    — 
Deductible stock-based compensation   (361,756)   — 
Other permanent differences   64,212    — 
Change in valuation allowance   10,736,152    2,175,412 
Total income tax benefit (provision)  $1,994,878   $534,396 

 

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2025 and 2024 are as follows:

 

   December 31, 2025   December 31, 2024 
Deferred tax assets:          
Net operating loss carryforwards  $—   $1,985,391 
Capitalized R&D costs (IRC §174)   2,997,463    316,902 
Accruals and reserves   —    31,168 
Operating lease liability   42,893    9,008 
Debt issuance costs   —    186,155 
Total gross deferred tax assets   3,040,356    2,528,624 
Valuation allowance   —    — 
Net deferred tax assets  $3,040,356   $2,528,624 
Deferred tax liabilities:          
Intangible assets  $(16,044,000)  $(13,524,213)
Right-of-use assets   (8,838)   (8,838)
Total deferred tax liabilities   (16,052,838)   (13,533,051)
Net deferred tax liability  $(13,012,482)  $(11,004,427)

 

The net deferred tax liability is presented on the consolidated balance sheet as a non-current deferred tax liability of $11,037,595 as of December 31, 2025 (December 31, 2024: $13,524,213), reflecting the netting of deferred tax assets and liabilities within the same jurisdiction pursuant to ASC 740-10-45.

 

As of December 31, 2025, the Company had federal net operating loss (“NOL”) carryforwards of approximately $13,962,000, which may be carried forward indefinitely under the Tax Cuts and Jobs Act of 2017, subject to an 80% taxable income limitation in any given year. The Company also has IRC Section 174 capitalized research and development costs of approximately $14,273,000, which are amortized for tax purposes over five years (domestic) or fifteen years (foreign-sourced), resulting in deferred tax assets that will reverse as those costs amortize through approximately 2030.

 

The Company evaluates the need for a valuation allowance against its deferred tax assets based on an assessment of whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of December 31, 2025, management determined that no valuation allowance was required, as the Company’s deferred tax assets are expected to be realizable against the existing deferred tax liability related to intangible assets within the same tax jurisdiction. The net deferred tax liability position provides an objective source of taxable income for realization of the deferred tax assets.

 

The Company files income tax returns in the U.S. federal and New York state jurisdictions. Tax years from 2021 onward remain open and subject to examination by the relevant tax authorities. The Company has no material unrecognized tax benefits as of December 31, 2025 or 2024, and does not anticipate any significant changes to unrecognized tax benefits within the next twelve months. No interest or penalties related to income taxes have been accrued for the years ended December 31, 2025 or 2024.