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

NOTE 12 – INCOME TAXES

 

The Company is subject to taxation in the United States and various states and local jurisdictions where it has determined it has tax nexus. The Company currently is not under examination by any tax authority, but the tax years 2022 through 2025 remain subject to examination by the relevant taxing authorities.

 

The Company accounts for income taxes under ASC 740-10, which provides for an asset and liability approach of accounting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributed to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes.

 

A reconciliation of the statutory federal income tax benefit to actual tax benefit is as follows for the years ended December 31, 2025 and 2024:

 

   December 31,
2025		   December 31,
2024		 
U.S. federal statutory rate   (21.0)%   (21.0)%
State taxes, net of federal benefit   (3.8)%   (3.7)%
Non-deductible losses   12.7%   2.0%
Change in valuation allowance   12.1%   22.7%
Effective tax rate   —%   —%

 

Significant components of the Company’s deferred tax assets are summarized below.

 

   As of
December 31,
2025		   As of
December 31,
2024		 
Deferred tax assets:          
Net operating loss carry forwards  $17,974,000   $13,680,000 
Total deferred tax asset   17,974,000    13,680,000 
Valuation allowance   (17,974,000)   (13,680,000)
Net deferred tax asset  $—   $— 

 

As of December 31, 2025 and 2024, the Company had approximately $77 million and $65 million in net operating loss carry-forwards for federal income tax reporting purposes, respectively. As a result of the Tax Cuts Job Act 2017 (the “Act”), certain future carryforwards do not expire. The Company has not performed a formal analysis but believes its ability to use such net operating loss carry forwards in the future is subject to annual limitations due to change of control provisions under Sections 382 and 383 of the Internal Revenue Code, which will significantly impact its ability to realize these deferred tax assets.

 

The Company recorded a valuation allowance in the full amount of its net deferred tax assets since realization of such tax benefits has been determined by the Company’s management to be less likely than not. The valuation allowance increased by $4,294,000 and $4,004,000 during the years ended December 31, 2025 and 2024, respectively.

 

The Company has evaluated its income tax positions and has determined that it does not have any uncertain tax positions. The Company will recognize interest and penalties related to any uncertain tax positions through its income tax expense.