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

9.    INCOME TAXES  

 

The Company provides for income taxes under FASB ASC 740, Accounting for Income Taxes. FASB ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently.

FASB ASC 740 requires the reduction of deferred tax assets by a valuation allowance, if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance equal to the deferred tax asset has been recorded. The total deferred tax asset is approximately $8.6 million as of December 31, 2025 which is calculated by multiplying a 21% estimated tax rate by the cumulative net operating loss (NOL) of approximately $39.0 million.

Due to the enactment of the Tax Reform Act of 2017, we have calculated our deferred tax assets using an estimated corporate tax rate of 21%. US Tax codes and laws may be subject to further reform or adjustment which may have a material impact to the Company’s deferred tax assets and liabilities.

The Company will recognize interest and penalties related to uncertain tax positions as a component of income tax expense. As of December 31, 2025, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statement of operations.

The significant components of the Company's deferred tax assets and liabilities as of December 31, 2025 and 2024 are as follows:

As of December 31,  2025  2024
Cumulative tax net operating losses (in millions)  $41.0   $40.0 
Statutory tax rate   21%   21%
Deferred tax asset (in millions)  $8.6   $8.4 
Valuation allowance (in millions)   (8.6)   (8.4)
Current taxes payable   —      —   
Income tax expense  $—     $—   

 

As of December 31, 2025 and 2024, the Company had gross federal net operating loss carryforwards of approximately $41.0 million and $40.0 million, respectively.

The Company plans to file its U.S. federal return for the year ended December 31, 2025 upon the issuance of this filing. Upon filing of the tax return for the year ended December 31, 2025 the actual deferred tax asset and associated valuation allowance available to the Company may differ from management’s estimates. The tax years 2024-2021 remained open to examination for federal income tax purposes by the major tax jurisdictions to which the Company is subject. No tax returns are currently under examination by any tax authorities.