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

NOTE 10. INCOME TAXES

 

The Company accounts for income taxes in accordance with ASC 740, Income Taxes. Under this guidance, deferred income taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as for net operating loss and tax credit carryforwards.

 

For the years ended December 31, 2025 and 2024, the loss before income taxes was $2,767,318 and $1,372,991, respectively. The Company had no tax expense or benefit for the years ending December 31, 2025 and 2024, and the Company had an effective tax rate of 0.00% for the years ended December 31, 2025 and 2024.

 

The reconciliation between the U.S. federal statutory income tax rate and the Company’s effective tax rate is as follows:

  

                 
   For the year ended 
   December 31, 2025   December 31, 2024 
   Amount   Percentage   Amount   Percentage 
US Federal Statutory Tax Rate  $(581,137)   21.00%  $(288,328)   21.00%
Foreign Tax Effect                    
Spain   5,970   (0.22)%   -    -%
Changes in Valuation Allowances   297,083    (10.73)%   96,411    (7.02)%
Nontaxable or Nondeductible Items                    
IPO Costs   277,662    (10.03)%   191,745    (13.97)%
Other   422    (0.02)%   172    (0.01)%
Effective Tax Rate  $-    0.00%  $-    0.00%

 

 

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2025 and 2024 are as follows:

 

   As of   As of 
   December 31,   December 31, 
   2025   2024 
Deferred tax assets:          
Start-up costs  $80,122   $85,880 
Net operating loss carryforwards   352,431    17,140 
Deferred related party interest expense   -    1,658 
Other   23,701    - 
Total gross deferred tax assets   456,254    104,678 
Valuation Allowance   (456,254)   (104,678)
           
Net deferred tax asset  $-   $- 

 

The Company has U.S. Federal net operating loss (“NOLs”) carryforwards of approximately $1,400,000 as of December 31, 2025. The Spanish Branch has net operating loss carryforwards of approximately $200,000. The U.S. NOLs were generated after December 31, 2017, have an indefinite carryforward period, and are subject to an annual limitation of 80% of taxable income. Spanish net operating losses do not expire and can be carried forward indefinitely.

 

The Company has federal net operating loss carryforwards available to offset future taxable income. Utilization of these net operating losses may be subject to annual limitations under Section 382 of the Internal Revenue Code if the Company undergoes an ownership change, as defined in the Code. An ownership change occurs when there is a cumulative change in ownership of more than 50 percentage points by certain stockholders over a rolling three-year period. If such an ownership change were to occur, the amount of net operating losses that could be utilized annually would be limited. Spain also has limitations on net operating losses in specific and typically anti-avoidance scenarios. The Company has not performed a study to identify any ownership changes. Accordingly, no Section 382 limitation has been recorded.

 

Valuation Allowance

 

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 temporary differences representing future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax assets, projected future taxable income and tax planning strategies in making this assessment. After consideration of all the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore maintained a full valuation allowance.

 

Uncertain Tax Positions

 

As of December 31, 2025 and 2024, the Company had no unrecognized tax benefits. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. No such amounts were recognized during the periods presented.