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

NOTE 9 - INCOME TAXES

 

The Company follows FASB ASC 740-10-10 whereby an entity recognizes deferred tax assets and liabilities for future tax consequences or events that have been previously recognized in the Company’s financial statements or tax returns. The measurement of deferred tax assets and liabilities is based on provisions of enacted tax law. The effects of future changes in tax laws or rates are not anticipated.

 

As of December 31, 2025, the Company had net operating loss carry forwards of approximately $111,330,000, comprised of net operating losses in the amount of approximately $66,194,000 recorded in tax years beginning prior to January 1, 2018 expiring through the year ending December 31, 2038 and net operating losses recorded in tax years beginning January 1, 2018 and after in the amount of approximately $45,136,000 which are allowed for an indefinite carryforward period but may be subject to limitations. This amount can be used to offset future taxable income of the Company.

 

The income tax (benefit) provision consists of the following:

 

    December 31,  
    2025     2024  
Current   $ (2,198,000 )   $ (2,387,000 )
Deferred     449,000       (188,000 )
Change in valuation allowance     1,749,000       2,575,000  
                 
    $ -     $ -  

 

The Company adopted ASU 2023-09 effective January 1, 2025. The rate reconciliation for the years ended December 31, 2025 and 2024 is presented under the updated disclosure requirements.

 

The reconciliation of the statutory federal rate to the Company’s effective income tax rate is as follows:

 

    December 31, 2025     December 31, 2024  
    Amount     %     Amount     %  
U.S federal income tax benefit at Federal statutory rate   $ (2,015,000 )     (21 )   $ (1,875,000 )     (21 )
State tax, net of federal tax effect     (753,000 )     (8 )     (700,000 )     (8 )
Non-deductible share-based compensation     1,019,000       11       -       -  
Change in valuation allowance     1,749,000       18       2,575,000       29  
                                 
Net   $ -       -     $ -       -  

 

The primary components of the Company’s December 31, 2025 and 2024 deferred tax assets and related valuation allowances are as follows:

 

    December 31,  
    2025     2024  
             
Deferred tax asset for NOL carryforwards   $ (36,803,000 )   $ (34,605,000 )
Deferred tax asset for stock based compensation     (5,294,000 )     (5,743,000 )
Valuation allowance     42,097,000       40,348,000  
                 
Net   $ -     $ -  

 

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 not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the net operating losses and temporary differences become deductible. Management considered projected future taxable income and tax planning strategies in making this assessment. The value of the deferred tax assets was offset by a valuation allowance, due to the current uncertainty of the future realization of the deferred tax assets.

 

The timing and manner in which the Company can utilize operating loss carryforwards in any year may be limited by provisions of the Internal Revenue Code regarding changes in ownership of corporations. Such limitation may have an impact on the ultimate realization of its carryforwards and future tax deductions.

 

The Company follows FASB ASC 740.10, which provides guidance for the recognition and measurement of certain tax positions in an enterprise’s financial statements. Recognition involves a determination of whether it is more likely than not that a tax position will be sustained upon examination with the presumption that the tax position will be examined by the appropriate taxing authority having full knowledge of all relevant information.

 

The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the statement of operations. As of January 1, 2025, the Company had no unrecognized tax benefits and no charge during 2025, and accordingly, the Company did not recognize any interest or penalties during 2025 related to unrecognized tax benefits. There is no accrual for uncertain tax positions as of December 31, 2025.

 

The Company files U.S. income tax returns and a state income tax return. With few exceptions, the U.S. and state income tax returns filed for the tax years ending on December 31, 2022 and thereafter are subject to examination by the relevant taxing authorities.