v3.26.1
Note 5 - Income Taxes
 12 Months Ended
Dec. 31, 2025
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

NOTE 5 – INCOME TAXES

 

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023‑09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances income tax disclosure requirements related to the effective tax rate reconciliation and income taxes paid.

 

The Company adopted ASU 2023‑09 effective January 1, 2025 and applied the guidance prospectively to all periods presented. The adoption did not impact the Company’s accounting for income taxes, financial position, results of operations, or cash flows; however, prior‑period income tax disclosures have not been revised to conform to the new requirements.

 

In assessing the realizability of deferred tax asset, including the net operating loss carryforwards (NOLs), the Company assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize its existing deferred assets. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period when those temporary differences become deductible. Based on its assessment, the Company has provided a full valuation allowance against its net deferred tax assets as their future utilization remains uncertain at this time. During the years ended December 31, 2025 and 2024, the deferred tax valuation allowance decreased by 20,092 and 24,376,664 respectively. The decrease in the valuation allowance during 2024 was mainly attributable to changes in how the Company calculated its gross deferred tax asset related to its state NOL.

 

At December 31, 2025, the Company had approximately $91,439,122 of U.S. federal net operating tax loss carryforward, some of which begins to expire in 2027. In accordance with Section 382 of the Internal Revenue code, the usage of the Company's Federal Carryforwards could be limited in the event of a change in ownership. As of December 31, 2025, the Company has not completed an analysis as to whether or not an ownership change has occurred. The Company is currently subject to the general three-year statute of limitations for federal tax. Under this general rule, the earliest period subject to potential audit is 2022. For years in which the Company may utilize its net operating losses, the IRS has the ability to examine the tax year that generated those losses and propose adjustments up to the amount of losses utilized.

 

 

 

The provision for income taxes consists of the following:

 

  

2025

  

2024

 

Current:

        

Federal

 $—  $— 

State income tax, net of federal benefit

  5,957   (29,422)

Sub-total:

  5,957   (29,422)
         

Deferred:

        

Federal

  —   — 

State income tax, net of federal benefit

  —   — 

Sub-total:

  —   — 

Total

 $5,957  $(29,422)

 

 

  

Years Ended December 31,

 
  

2025

 
  

Amount

  

%

 

U.S. Federal statutory tax rate

 $(670,844)  21.00%

State and local income tax, net of federal income tax effect

        

Georgia Income Tax Effect

  9,613   -0.30%

Texas Income Tax Effect

  14,216   -0.44%

California Income Tax Effect

  4,990   -0.16%

All Other States Income Tax Effect

  14,697   -0.46%

Change in State Valuation Allowance

  73,643   -2.31%

State Rate Change Adjustment

  (134,713)  4.22%

State Return to Provision Adjustments

  23,511   -0.74%

Changes in Federal valuation allowance

  (33,261)  1.04%

Nontaxable or nondeductible items

        

Disallowed interest

  673,785   -21.09%

Other

  1,192   -0.04%

Other adjustments

        

Return to Provision Adjustments

  29,128   -0.91%

Other, net

  —   0.00%

Income tax expense (benefit)

 $5,957   -0.19%
         
  

Years Ended December 31,

 
  

2024

 
  

Amount

  

%

 

U.S. Federal statutory tax rate

 $(967,073)  21.00%

State and local income tax, net of federal income tax effect

  (117,832)  2.55%

Tax Credits - R&D

  (80,589)  1.75%

Changes in valuation allowances

  (24,376,664)  529.34%

Disallowed interest

  658,136   -14.29%

Other

  1,596   -0.03%

Deferred tax effects of state net operating loss true-ups

  24,853,004   -539.68%

Income tax expense (benefit)

 $(29,422)  0.64%

 

 

 

The components of the deferred tax assets and liabilities are as follows:

 

  

December 31,

 
  

2025

  

2024

 
         

Deferred Tax Assets (Liabilities):

        

Federal net operating loss carry-forwards

 $19,202,216  $18,781,815 

State net operating loss carry-forwards

  93,437   76,054 

Accrued interest

  871,968   848,914 

Stock based compensation

  1,019,669   846,566 

Intangible assets

  (22,571)  (18,450)

Fixed assets

  17,513   21,923 

Accrued liabilities

  73,788   126,457 

Lease liabilities

  17,090   — 

Capitalized research expenses

  —   554,946 

Research and development credit carry-forward

  65,796   80,589 

Total deferred tax assets

  21,338,906   21,318,814 

Valuation allowance for deferred tax assets

  (21,338,906)  (21,318,814)

Deferred tax assets, net of valuation allowance

 $—  $—