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

NOTE 11. INCOME TAX

The Company has no current or deferred tax expense due to its current year loss and its overall net operating loss position. A reconciliation of the federal statutory tax rate and the effective tax rates for the year ended December 31, 2025 and 2024 is as follows:

 

 

 

Year Ended December 31,

 

 

 

2025

 

2024

 

 

 

Amount

 

Percent

 

Percent

 

Federal Tax at Statutory Rate

 

 

(2,628,293.00

)

 

21.00

 %

 

21.00

 %

State Taxes

 

 

-

 

 

—

 %

 

—

 %

Permanent

 

 

25,826.00

 

 

(0.21

)%

 

(0.83

)%

Credits

 

 

(27,915.00

)

 

0.22

 %

 

1.34

 %

Valuation Allowance

 

 

2,630,478.00

 

 

(21.02

)%

 

(21.51

)%

Other

 

 

(96.00

)

 

—

 %

 

—

 %

 

 

 

 

 

 

 

Effective Tax Rate

 

 

—

 %

 

—

 %

 

—

 %

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets were as follows:

 

 

 

2025

 

2024

 

Capitalized R&D Expenses

 

$

4,142,751

 

$

4,565,699

 

Other Deferred Items

 

 

394,900

 

 

43,982

 

Stock Compensation

 

 

462,785

 

 

437,328

 

Net Operating Loss - US

 

 

11,963,371

 

 

8,349,314

 

R&D Credits

 

 

3,941,317

 

 

3,701,895

 

Deferred Revenue

 

 

881,229

 

 

—

 

 Total gross deferred tax assets

 

$

21,786,353

 

$

17,098,218

 

 

 

 

 

 

 

Valuation Allowance

 

 

(21,786,353

)

 

(17,098,218

)

 

 

 

 

 

Net deferred tax assets

 

 

—

 

 

—

 

 

In assessing the realizability of the net deferred tax assets the Company considers all relevant positive and negative evidence to determine whether it is more likely than not that some portion of the deferred income tax will not be realized. The realization of the gross deferred tax assets is dependent on several factors, including the generation of sufficient taxable income prior to expiration of the net operation loss carryforwards. At December 31, 2025 and 2024 the Company has recorded a full valuation allowance against its net deferred tax assets of approximately $21, 786,000 and $17,098,000 respectively. The change in valuation allowance during the year ended 2025 was approximately $4,688,000.

At December 31, 2025, the Company had federal net operation loss (NOL) carryforwards of approximately $54.5 million. At December 31, 2025, the Company had federal research and development credit carryforwards of approximately $3.5 million. The federal net operating loss carryforwards begin to expire in 2028, losses generated in 2018 or later of $54.5 million will carry forward indefinitely. The federal credit carryforwards begin to expire in 2045. Sections 382 and 383 of the Internal Revenue Code of 1986 subject the future utilization of net operating losses and certain other tax attributes, such as research and experimental tax credits, to an annual limitation in the event of certain ownership changes, as defined. The Company may be subject to the net operating loss utilization provision of Section 382 of the Internal Revenue Code. The effect of an ownership change would be the imposition of an annual limitation of the use of NOL carryforwards attributable to periods before the change. The amount of the annual limitation depends upon the value of the Company immediately before the change, changes to the Company's capital

during a specified period prior to the change, and the federal published interest rate. Although the Company has not completed an analysis under Section 382 of the Code, it is likely that the utilization of the NOLs will be limited.

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. The Company's U.S. federal and state net operating losses have occurred since its inception in 2009 and as such, tax years subject to potential tax examination could apply from that date. This is because the utilization of net operating losses from prior years opens the relevant year to audit by the IRS and/or state taxing authorities. Interest and penalties, if any, as they relate to income taxes assessed, are included in the income tax provision. The Company did not have any unrecognized tax benefits and has not accrued any interest or penalties for the 12 months ended December 31, 2025 and 2024.