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

Note 10 – Income Taxes

 

For the years ended December 31, 2025 and 2024, all pre-tax income (loss) was attributable to domestic operations.

 

The Components of the deferred tax assets and liabilities at December 31, 2025 and 2024 were approximately as follows:

                  

Schedule of deferred tax assets and liabilities                                    December 31, 2025   December 31, 2024 
Deferred Tax Assets          
Lease liability  $39,000   $9,000 
Amortization of debt discount   62,000    62,000 
Stock based compensation   1,051,000    - 
Other   161,000    22,000 
Net operating loss carryforwards   12,434,000    11,727,000 
Total deferred tax assets   13,747,000    11,820,000 
           
Deferred Tax Liabilities          
Right-of-use asset   (38,000)   (9,000)
Property and equipment - net   (8,000)   (7,000)
Total deferred tax liabilities   (46,000)   (16,000)
           
Less: valuation allowance   13,701,000    11,804,000 
Deferred tax assets - net  $-   $- 

 

The components of the income tax benefit and related valuation allowance for the years ended December 31, 2025 and 2024 was approximately as follows:

 

Schedule of income tax benefit and related valuation allowance  December 31, 2025   December 31, 2024 
Current Provision          
  Federal  $-   $- 
  State   -    - 
    Total current provision   -    - 
Deferred Provision          
  Federal   (1,580,000)   (308,000)
  State   (317,000)   - 
Valuation allowance   1,897,000    308,000 
Total deferred benefit   -    - 
Income tax benefit  $-   $- 

 

F-53

 

 

A reconciliation of the provision for income taxes for the years ended December 31, 2025 and 2024 as compared to statutory rates was approximately as follows:

 

   December 31, 2025       December 31, 2024     
Federal income tax benefit - 21%  $(2,227,000)   21.00%  $(500,000)   21.02%
State income tax - net of federal (1)   -    0.00%   -    0.00%
Expiration of net operating loss carryforwards   776,000    -7.32%   192,000    -8.07%
Subtotal   (1,451,000)   13.68%   (308,000)   12.95%
Change in valuation allowance   1,451,000    -13.68%   308,000    -12.95%
Income tax benefit  $-    0.00%  $-    0.00%

 

(1) State taxes in New York made up the majority of the effect of the state income tax category.

 

Federal net operating loss carry forwards at December 31, 2025 and 2024 were approximately as follows:

 

    December 31, 2025   December 31, 2024 
Federal   $50,039,000   $48,764,000 
State    28,960,000    28,954,000 
Total   $78,999,000   $77,718,000 

 

Deferred tax assets and liabilities are recognized for temporary differences between the financial reporting and tax bases of assets and liabilities and for net operating loss (“NOL”) carryforwards and other tax attributes, measured using enacted federal and state income tax rates.

 

The Company evaluates the realizability of deferred tax assets by assessing whether it is more likely than not that some portion or all of the deferred tax assets will be realized. Given the Company’s history of cumulative losses, a full valuation allowance has been recorded against net deferred tax assets as of December 31, 2025. During the year ended December 31, 2025, the valuation allowance increased by approximately $1,897,000.

 

The Company has federal NOL carryforwards of approximately $5,952,000 as of December 31, 2025 that do not expire.

 

The Company also accumulated a federal NOL carryforward of approximately $44,087,000 through December 31, 2017 and this NOL carryforward begins to expire in 2026.

 

Additionally, at December 31, 2025, the Company had approximately $28,960,000 of New York NOL carryforwards which begins to expire in 2035.

 

All such NOLs have been fully reserved through the valuation allowance. The Company is currently analyzing its NOLs to determine whether ownership changes as defined under Section 382 of the Internal Revenue Code have occurred. Any such ownership changes could limit the utilization of NOL carryforwards. The amount of post-change taxable income that may be offset is limited annually by the “Section 382 Limitation,” generally calculated as the value of the Company immediately before the ownership change multiplied by a long-term interest rate established monthly by the Internal Revenue Service. The Company has not yet determined whether any such limitation applies. Aside from Section 382, there may be other restrictions or limitations of our NOLs.

 

The Company files corporate income tax returns in the United States. Our U.S. tax matters for 2022 through 2024 remain subject to IRS examination. Our state tax matters for 2021 through 2024 remain subject to examination by state tax jurisdictions. Our U.S. and state tax matters for previous years also remain subject to examination due to the remaining availability of net operating loss carryforwards generated in those years.

 

As of December 31, 2025 and 2024, the Company had no uncertain tax positions that qualified for recognition or disclosure in the financial statements. The Company also recognizes interest and penalties related to uncertain tax positions in other expense in the Statement of Operations. No interest and penalties were recorded for the years ended December 31, 2025 and 2024.

 

Because of its cumulative NOL carryforward position, all prior tax years remain subject to examination by federal and state taxing authorities.