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

Note 10. Income Taxes

 

Net loss before income taxes in the United States and Australia was approximately $16,980,000 and $139,000, respectively, during the year ended December 31, 2025.

 

Our effective tax rate differs from the statutory federal tax rate as presented in the following table for the year ended December 31, 2025:

 

   Amount   Percent 
U.S. federal statutory tax rate  $(3,597,000)   21.0%
Research and development credits   (493,000)   2.9 
Nontaxable or nondeductible items   110,000    (0.6)
Changes in valuation allowance   3,980,000    (23.3)
Effective Income Tax Rate  $-    -%

 

Our effective tax rate differs from the statutory federal tax rate as presented in the following table for the year ended December 31, 2024:

 

   Percent 
U.S. federal statutory tax rate   21.0%
Permanent differences   4.0 
Valuation allowance   (25.0)
    -%

 

As of December 31, 2025 and 2024, the Company was domiciled in Texas, and due to the losses generated and no revenues, it incurred no current federal or state tax. Furthermore, the Company has not made any income tax payments during the years ended December 31, 2025 and 2024.

 

The tax effect of the temporary differences that give rise to the significant portions of the deferred tax assets and liabilities is presented below.

 

       
   December 31, 
   2025   2024 
Deferred tax assets          
Research and development credits  $2,716,190   $2,222,625 
Stock-based compensation   624,182    584,840 
Net operating loss carryforwards   16,092,865    9,353,936 
Research and development amortization   2,324,817    5,617,727 
Deferred tax asset   21,758,054    17,779,128 
           
Less: valuation allowance   (21,754,428)   (17,772,997)
Net deferred tax asset   3,626    6,131 
           
Deferred tax liabilities          
Unrealized gains on securities   (438)   (1,837)
Operating lease right-of-use assets   (622)   (776)
Fixed assets   (2,566)   (3,518)
Net deferred tax assets  $-   $- 

 

 

Due to a history of losses the Company has generated since inception, the Company believes it is more-likely-than-not that all of the deferred tax assets will not be realized as of December 31, 2025 and 2024. Therefore, the Company has recorded a full valuation allowance on its deferred tax assets. At December 31, 2025 and 2024, the Company has net operating loss (“NOL”) carryforwards for federal income tax purposes of approximately $75,600,000 and $43,600,000, respectively. The NOL carryforwards generated prior to 2018 of approximately $3,100,000 could expire over time beginning in 2035, if not used. The NOL carryforwards generated from January 1, 2018 through December 31, 2025 of approximately $72,500,000 do not expire and are carried forward indefinitely. The Company has state NOLs of approximately $1,000,000 at December 31, 2025. Australian NOLs were approximately $600,000 at December 31, 2025 and can be carried forward indefinitely, but may be subject to limitation in the event of certain corporate stock transactions the Company may enter into in the future. The Company also has approximately $2,700,000 of research and development tax credit carryforwards for federal purposes. These credits begin expiring in 2039. Due to the change in ownership provisions of the Internal Revenue Code, the availability of the Company’s NOL carryforwards and research and development credit carryforwards may be subject to annual limitations under Section 382 of the Internal Revenue Code against taxable income in the future period, which could substantially limit the eventual utilization of such carryforwards.

 

Entities are also required to evaluate, measure, recognize and disclose any uncertain income tax provisions taken on their income tax returns. The Company has analyzed its tax positions and has concluded that as of December 31, 2025, there were no uncertain positions. In addition, interest and penalties, if any, as they relate to income taxes assessed, are included in the income tax provision, for which there were none. The Company’s U.S. federal operating losses have occurred since its inception and as such, tax years subject to potential tax examination could apply from that date because the utilization of net operating losses from prior years opens the relevant year to audit by the IRS and/or state taxing authorities. The statute of limitations expires three years after the utilization of historical losses.